<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1998
REGISTRATION NO. 333-50643
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
MIPS TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
<TABLE>
<S> <C> <C>
DELAWARE 3571 77-0322161
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
2011 NORTH SHORELINE BLVD.
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 960-1980
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JOHN E. BOURGOIN
MIPS TECHNOLOGIES, INC.
2011 NORTH SHORELINE BLVD.
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 960-1980
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
<TABLE>
<S> <C>
WILLIAM H. HINMAN, JR. JOSHUA L. GREEN
SHEARMAN & STERLING JEFFREY Y. SUTO
555 CALIFORNIA STREET VENTURE LAW GROUP
SAN FRANCISCO, CALIFORNIA 94104 A PROFESSIONAL CORPORATION
(415) 616-1100 2800 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
(650) 854-4488
</TABLE>
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Company in connection with the sale
of the Common Stock being registered. All of the amounts shown are estimates
except for the SEC registration fee, the NASD filing fee and the Nasdaq
National Market Application Fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 26,123
NASD Filing Fee............................................. 8,090
Nasdaq National Market Application Fee...................... 95,000
Blue Sky Qualification Fees and Expenses.................... 5,000
Printing and Engraving Expenses............................. 175,000
Legal Fees and Expenses..................................... 450,000
Accounting Fees and Expenses................................ 275,000
Miscellaneous............................................... 15,787
----------
Total..................................................... $1,050,000*
==========
</TABLE>
- --------
* Of this amount, approximately $240,000 will be paid by the Company and
$810,000 will be paid by Silicon Graphics, Inc.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by reason of the fact
that such person is or was an officer or director of such corporation or is or
was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation, and, in the
case of criminal proceedings, had no reasonable cause to believe his or her
conduct was illegal. A Delaware corporation may indemnify officers and
directors against expenses (including attorneys' fees) in connection with the
defense or settlement of an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against expenses which such officer or director actually
and reasonably incurred. The Restated Certificate of Incorporation of the
Company provides for indemnification of the officers and directors of the
Company to the full extent permitted by applicable law.
In accordance with Delaware law, the Restated Certificate of Incorporation
of the Company contains a provision to limit the personal liability of
directors of the Company for violations of their fiduciary duty. This
provision eliminates each director's liability to the Company or its
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, providing for liability
of directors for unlawful payment of dividends or unlawful stock
II-1
<PAGE>
purchases or redemptions or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence.
Pursuant to the underwriting agreement between the Company, Silicon Graphics
and the underwriters filed as an exhibit to this Registration Statement, the
underwriters a party thereto have agreed to indemnify each officer and
director of the Company and Silicon Graphics, Inc. and each person, if any,
who controls the Company and Silicon Graphics, Inc. within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), against certain
liabilities, including liabilities under said Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Within the past three years, the Company has not issued or sold any
unregistered securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
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<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Form of Certificate of Incorporation of the Registrant*
3.2 Form of By-Laws of the Registrant*
4.1 Form of Common Stock Certificate*
5.1 Opinion of Shearman & Sterling*
10.1 Form of Separation Agreement*
10.2 Form of Corporate Agreement*
10.3 Form of Management Services Agreement*
10.4 Form of Tax Sharing Agreement*
10.5 Form of Technology Agreement*
10.6 Form of Trademark Agreement*
10.7.1 Joint Development and License Agreement between Nintendo Co., Ltd.
and Nintendo of America Inc. on the one hand and Silicon Graphics,
Inc. and MIPS Technologies, Inc. on the other hand (the "Joint
Development and License Agreement")+
10.7.2 First Addendum to the Joint Development and License Agreement+
10.7.3 Second Addendum to the Joint Development and License Agreement+
10.7.4 Fourth Addendum to the Joint Development and License Agreement+
10.8 Form of MIPS Technologies, Inc. 1998 Long-Term Incentive Plan*
10.9 Form of Employee Stock Purchase Plan*
10.10 Promissory Notes between Silicon Graphics, Inc. and Lavi Lev*
23.1 Consent of Ernst & Young LLP, Independent Auditors*
23.2 Consent of Shearman & Sterling (included in Exhibit 5.1)*
23.3 Consent of Anthony B. Holbrook*
23.4 Consent of Fred M. Gibbons*
24.1 Power of Attorney for Kevin C. Eichler*
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
24.2 Power of Attorney for John E. Bourgoin, William M. Kelly, Kenneth L.
Coleman, Teruyasu Sekimoto and Dr. Forest Baskett*
27.1 Financial Data Schedule*
</TABLE>
- --------
*Previously filed.
+ The Company has applied for confidential treatment of portions of this
Exhibit. Accordingly, portions thereof have been omitted from the public
filing.
(b) FINANCIAL STATEMENT SCHEDULES
Schedules have been omitted because the information required to be set forth
therein is not applicable or is shown in the Consolidated Financial Statements
or the Notes thereto.
ITEM 17. UNDERTAKINGS
(a) The Registrant hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(ii) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Amendment No. 4
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mountain View, State of California,
on the 25th day of June, 1998.
MIPS Technologies, Inc.
/s/ John E. Bourgoin
By: _________________________________
Name: John E. Bourgoin
Title: Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John E. Bourgoin
___________________________________ Chief Executive Officer and June 25, 1998
John E. Bourgoin Director (Principal Executive
Officer)
*
___________________________________ (Principal Financial and June 25, 1998
Kevin C. Eichler Accounting Officer)
*
___________________________________ Director June 25, 1998
William M. Kelly
*
___________________________________ Director June 25, 1998
Kenneth L. Coleman
*
___________________________________ Director June 25, 1998
Teruyasu Sekimoto
*
___________________________________ Director June 25, 1998
Forest Baskett
</TABLE>
*By: /s/ John E. Bourgoin
---------------------------
John E. Bourgoin
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT 10.7.1
[XXXXXX]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
JOINT DEVELOPMENT AND LICENSE AGREEMENT
This JOINT DEVELOPMENT AND LICENSE AGREEMENT is made the 20/th/ day of August,
1993, among Nintendo Co., Ltd., a Japan corporation having a place of business
at 60 Fukuine Kamitakamatsu-cho, Higashiyama-ku, Kyoto 605, Japan ("NCL"),
Nintendo of America Inc., a Washington corporation, having a place of business
at 4820 150/th/ Avenue NE, Redmond, WA 98052 ("NOA") (NCL and NOA are
collectively referred to as "Company"), Silicon Graphics, Inc., a Delaware
corporation and MIPS Technologies, Inc., a Delaware corporation, both of which
have a place of business at 2011 North Shoreline Blvd., Mountain View, CA 94039-
7311 (collectively, "SGI").
WHEREAS, SGI (i) is in the business of designing, manufacturing and marketing
computer graphics workstation, server, subsystem, board level, and
microprocessor products, including accessories, options and software therefor,
and (ii) possesses expertise and owns proprietary rights relating to its
products, including, but not limited to, copyrights, know-how, inventions, trade
secrets, patents, patent applications and the like;
WHEREAS, Company (i) is in the business of: developing, manufacturing and
distributing high quality entertainment systems, including the Nintendo
Entertainment System(R), the Super Nintendo Entertainment System(R), the
Famicom/TM/, the Super Famicom/TM/, and the Game Boy(R) compact video game
system, and (ii) possesses expertise and owns proprietary rights relating to its
products, including, but not limited to, copyrights, know-how, inventions, trade
secrets, patents, patent applications and the like; and
WHEREAS, the parties desire to conduct joint development of products which will
incorporate certain existing technology of SGI, and new technology to be jointly
developed by the parties;
NOW, THEREFORE, in furtherance of the foregoing, and in consideration of the
mutual covenants set forth below, Company and SGI hereby agree as follows:
1. DEFINITIONS
1.1 "ACCESSORY" means a peripheral device which mechanically or
electrically connects to the Consumer Hardware to enhance the application
software. Examples of an Accessory include, but are not limited to: a
specialized joystick, head-mounted display or a CD ROM player.
1.2 "AFFILIATE" means any Person that directly or indirectly controls, is
controlled by, or is under common control with another Person.
1.3 "AGREEMENT" means this Joint Development and License Agreement.
1.4 "BACKGROUND TECHNOLOGY" means all Technology which (i) is under the
Control of SGI, (ii) was developed by SGI prior to the Effective Date or is
under development by SGI as of the Effective Date, and (iii) is implemented into
the design of one or more Company Products, including but not limited to, the
Technology specified in Attachment A to this Agreement.
1.5 "COIN OPERATED HARDWARE" means a dedicated screen and speaker which
are fully integrated so as to compromise a single physical unit or multiple
physical units, when such hardware (i) remains free-standing and stationary
during play, (ii) requires the player to insert coins, paper currency, credit
cards or tokens in a metering device to initiate Video Game play or non-Video
Game applications, (iii) is otherwise designed for installation at arcades or
other retail or commercial establishments, and (iv) has a wholesale price of
less than U.S. $30,000.00.
1.6 "COIN OPERATED SOFTWARE" means Video Game and Non-Video Game
software applications for use with the Coin-Operated Hardware.
1.7 "COMPANY" means NOA and NCL.
1.8 "COMPANY PRODUCTS" means the following products manufactured by or
on behalf of Company and/or the Licensees and sold by Company and/or the
Licensees, to the extent that they incorporate or are based upon some or all of
the Background Technology and/or the Developed Technology: (i) the Consumer
Hardware, (ii) the Packaged Software (and the application software stored
therein), (iii) Accessories, (iv) Coin Operated Hardware and (v) Coin Operated
Software.
1.9 "COMPANY TECHNOLOGY" means technology which (i) was developed by
Company prior to the Effective Date or is under development by Company as of the
Effective Date, or (ii) is otherwise independently developed or owned by
Company. In this Section 1.9, "technology" means technical information, data
and processes, whether tangible or intangible, including, without limitation,
any and all techniques, discoveries, inventions, copyrights, mask works, net
lists, know-how, patents (including any extension, reissue, continuation or
renewal patents), patent applications, mask work or copyright applications,
inventor certificates, trade secrets, designs, drawings, specifications,
software programs (including source code and object code), microcode, operating
and instruction manuals, magnetic tapes, methods of production, and other
proprietary information.
1.10 "CONSUMER HARDWARE" means stand-alone electronic hardware for
consumer use consisting of a microprocessor and other components which are
collectively designed, manufactured, distributed, sold, and marketed, at the
time of market introduction, primarily for the playing of Video Games in
conjunction with player input transmitted by "control pads" consisting of
directional buttons or switches, and/or joysticks,
Page 1 of 16
<PAGE>
optical light guns, accelerator sensors, or other peripheral devices, which may
be manipulated by the thumbs and/or one or two fingers of each hand of the
player, or by the foot, hand, head, or body of the player. Consumer Hardware
generates the visual and aural output of Video Games, or other software
applications, by means of a hard-wire interface or connection with a television
set or other output display. Based on market information currently available,
examples of Consumer Hardware currently include, but are not limited to, the
following: the Nintendo Entertainment System; the Sega Game Gear, the Nintendo
Game Boy System, the Super Nintendo Entertainment System; the Sega Genesis;
Atari Jaguar; and the Interactive Multiplayer sold under license from 3DO
Company. The Consumer Hardware may be used for software applications other than
playing Video Games.
1.11 "CONTROL" means, in the case of Background Technology, the possession
by either party of the right to grant licenses or sublicenses to, or otherwise
distribute, Background Technology without (i) violating the terms of any
agreement or other arrangement with, or the rights of, any third party, or any
binding laws or regulations, and (ii) such grant or the exercise of rights
thereunder giving rise to the payment of royalties, fees or other consideration
to a third party (except for payments between a party and its Affiliates).
"Control" means, in the case of a corporation or other legal entity, the
ownership or the right to vote in the corporation sufficient to elect a majority
of the corporation's board of directors.
1.12 "COORDINATOR" means a qualified representative of a party designated
by such party as project coordinator, to be responsible for supervising and
coordinating the implementation of the Development Plan hereunder.
1.13 "DEVELOPED TECHNOLOGY" means the Technology developed specifically
for purposes of this Agreement and delivered by SGI to Company in the course of
the Development Plan, whether or not patentable or registrable, which is
conceived or first actually reduced to practice solely by a party, or jointly by
the parties, under the Development Plan, as listed in Attachment B (Developed
Technology). Developed Technology shall not include any of the Background
Technology, regardless of whether such Background Technology is implemented or
incorporated into Developed Technology. Developed Technology shall not include
Company Technology.
1.14 "DEVELOPMENT PLAN" means the plan for the research and development
of the Developed Technology conducted under the terms and conditions of this
Agreement, as mutually agreed in writing by SGI and Company.
1.15 "EFFECTIVE PLAN" means the date first set forth above, on which date
the term of this Agreement shall commence.
1.16 "FILING" means the submission of any documentation, application,
filing, registration or the like required to perfect or, with respect to
copyright registrations, to enforce, the parties' interest in the Developed
Technology under statutory intellectual property rights protection mechanisms,
including, without limitation, any correspondence or other communication with
any patent or copyright office or other governmental entities with respect
thereto.
1.17 "LICENSED BACKGROUND TECHNOLOGY" means Background Technology
implemented in the Developed Technology, but only to the extent that such
Background Technology is not Purchasable Background Technology.
1.18 "LICENSEE" means a third party licensed by Company to use, design,
manufacture, market, distribute and/or sell Packaged Software, Accessories, Coin
Operated Hardware, and/or Coin Operated Software.
1.19 "PACKAGED SOFTWARE" means the form by which the application software
(Video Game and non-Video Game software) used in connection with the Consumer
Hardware is distributed to consumers, including but without limitation, by semi-
conductor, magnetic, optical media and/or similar method of distribution.
Packaged Software shall exclude: (i) application software transmitted
electronically and (ii) upgrades to system software that is embedded in the
Consumer Hardware.
1.20 "PERSON" means a corporation, partnership, trust, association,
government authority, educational institution, individual or other legal entity.
1.21 "PURCHASABLE BACKGROUND TECHNOLOGY" means equipment, software and
components that SGI and/or SGI licensees make generally available to third
parties and for which separate price quotes are included in price lists,
including INDY computer systems, MIPS(R) microprocessors and MIPS(R) compilers.
1.22 "SGI" means Silicon Graphics, Inc., and MIPS Technologies, Inc.
1.23 "TECHNOLOGY" means technical information, data and processes,
whether tangible or intangible, including, without limitation, any and all
techniques, discoveries, inventions, copyrights, mask works, net lists, know-
how, patents (including any extension, reissue, continuation or renewal
patents), patent applications, mask work or copyright applications, inventor
certificates, trade secrets, designs, drawings, specifications, schematics,
software programs (including source and object codes), microcode, operating and
instructional manuals, magnetic tapes, methods of production and any other
proprietary information. Technology is either Background Technology or Developed
Technology.
1.24 "THEME PARK APPLICATION SYSTEM" means an entertainment device or
system that has audio and/or visual stimulation capability and (i) which has a
cost to an operator of more than U.S. $30,000.00, and (ii) is located at a theme
park, amusement park, carnival entertainment center, retail or commercial
establishment.
1.25 "VIDEO GAME" means any aurally- and visually-oriented interactive
application game software, consisting of an independently marketed and packaged
unit of Packaged Software (or such unit of the Packaged Software when packaged
and
Page 2 of 16
<PAGE>
sold together with a unit of the Consumer Hardware). "Video Games" may be
played by one or more players at a time; may coordinate graphics with fanciful
tunes or thematically significant music, along with incidental sound effects;
may feature special effects; may be designated to keep score, record milestones,
or otherwise track the progress or achievement of the players in terms of
numbers or with respect to the fictional narrative of the game environment; and
are intended to amuse and entertain. Examples of Video Games include: Tetris and
Super Mario Bros. 3, both of which are distributed for play on the Nintendo
Entertainment System; Sonic the Hedgehog II, distributed for play on the Sega
Genesis Video Game System; Street Fighter II and NCAA Basketball, both of which
are distributed for play on the Super Nintendo Entertainment System.
2. ATTACHMENTS.
2.1 This Agreement includes the following attachments:
a. Attachment A (Background Technology), which sets forth and
------------
describes the Background Technology provided hereunder;
b. Attachment B (Developed Technology), which sets forth and
------------
describes the Technology to be developed hereunder;
c. Attachment C (Development Funding and royalties), which sets forth
------------
the development funding and royalties payable by Company to SGI
pursuant to this Agreement;
d. Attachment D (Competitive Companies), which sets forth the
------------
companies referred to in Section 6.4
e. Attachment E (Minimums for Exclusivity), which sets forth the
------------
royalties payable by Company as a condition to continued
exclusivity under Section 6.4.
All attachments listed in this Section 2 are incorporated into and form a part
of this Agreement.
3. SCOPE OF AGREEMENT
3.1 SCOPE. This Agreement sets forth the terms and conditions under
which (i) the parties shall conduct joint research and development of the
Developed Technology, (ii) Company will obtain a license to use the Licensed
Background Technology and the Developed Technology and (iii) SGI will arrange to
fulfill Company's requirements for Purchasable Background Technology.
3.2 LIMITED RIGHTS. Each party hereby acknowledges and agrees that the
scope of the relationship between the parties shall be limited to the purposes
and activities set forth herein, and that the rights and obligations of the
parties with respect to each other shall be limited to those provided in this
Agreement. Neither party has the authority to assume or create any obligation
or responsibility in the name of the other party except as specifically
authorized herein, or as authorized after the Effective Date hereof by the
mutual written agreement of the parties.
4. DEVELOPMENT ACTIVITIES.
4.1 NAMING A COORDINATOR. SGI shall designate a Coordinator to Company
in writing within fifteen (15) days after the Effective Date. Company hereby
designates Genyo Takeda as its Coordinator.
4.2 TECHNICAL AND FEASIBILITY REVIEW. Beginning on the Effective Date
and thereafter through January 31, 1994, (i) Company shall have the right to
evaluate the Background Technology and evaluate its suitability for the
development of and use in Consumer Hardware and Coin Operated Hardware, (ii)
Company and SGI will agree on a Development Plan, including the schedule for the
development of Company's Consumer Hardware and Coin Operated Hardware
incorporating the Developed Technology, the allocation of responsibility between
the parties, and the deliverables to be provided by each party to the other, and
(iii) Company and SGI will agree on the budget for the Development Plan. SGI
shall deliver a budget to Company for SGI's completion of its work under the
Development Plan that: (a) is stated as a flat fee (or fixed fee) for completion
of SGI's work under the Development Plan and represents SGI's good faith
calculation of its actual costs to complete its work under the Development Plan,
and (b) provides reasonable detail regarding such anticipated actual costs.
Provided SGI meets the foregoing conditions, and provided the budget is for U.S.
$XXXXXXXXX or less, Company shall accept the budget. This Agreement shall
terminate automatically if: (a) Company, in its sole discretion, desires to
terminate this Agreement and gives notice of its desire to terminate to SGI on
or before January 31, 1994, or (b) if Company and SGI do not agree in writing on
the Development Plan and the budget therefor on or before January 31, 1994;
provided, however, both parties are obligated to negotiate in good faith the
details of the Development Plan and budget. If this Agreement terminates on or
before January 31, 1994, then neither party shall have any further obligations
to the other under this Agreement, including the provisions of Section 7.0. From
the Effective Date through January 31, 1994, SGI shall facilitate Company's
evaluation of the Background Technology by (i) providing Company with a list of
patents pending and issued relating to the Background Technology, (ii) if
Company so requests, providing Company with copies of patent applications
pending and issued relating to the Background Technology; (iii) if Company so
requests, meeting and conferring with Company's patent counsel regarding such
patent information; and (iv) providing Company with such other information
reasonably requested by Company regarding the intellectual property rights of
SGI relating to the Background Technology.
4.3 DEVELOPMENT PLAN REVISIONS. At any time following the agreement of
SGI and Company on the Development Plan pursuant to Section 4.2, upon the mutual
written agreement of the parties, deliverable items and tasks may be
[XXXXXX]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
Page 3 of 16
<PAGE>
modified in, added to, or deleted from, the Development Plan, and equitable
adjustments made to the fees payable by Company to SGI under this Agreement and
the schedule for completion of the development of the Developed Technology. SGI
shall have no obligation to implement any changes to the Development Plan, and
Company shall have no obligation to pay any additional fees to SGI on account of
any such changes, unless SGI and Company have agreed in writing on any such
changes to the Development Plan, the associated fees and/or development
schedule.
4.4 DESIGN AND DEVELOPMENT ACTIVITIES. The parties shall use reasonable
efforts to conduct the research, experimentation, development and implementation
work necessary to complete the design and development of the Developed
Technology, substantially in accordance with the Development Plan Except as
otherwise provided in the Development Plan, neither party shall subcontract or
otherwise delegate the performance of the design and development services
required hereunder to any third party in amounts which, in the aggregate, exceed
Two Hundred Fifty Thousand Dollars ($250,000.00) without the prior written
approval of the other party, which approval shall not be unreasonably withheld
or delayed. To the extent that any planned procedures or development milestones
are not completed on schedule, the Coordinators shall determine whether a
rescheduling of such procedures or milestones is reasonably possible, or whether
alternative procedures or milestones should be implemented.
4.5 MEETINGS BETWEEN COORDINATORS. After the Effective Date and through
January 31, 1994, SGI shall make its Coordinator and other representatives
available from time to time for meetings (including meetings in Japan, subject
to availability) and/or telephone conferences with Company's Coordinator and
other Company representatives to assist Company with the technical and
feasibility review described in Section 4.2. Beginning on the first Monday
after the first full week following February 1, 1994, and monthly thereafter or
at such other intervals as SGI and Company may agree upon in writing during the
implementation of the Development Plan, the Coordinators shall meet at mutually
acceptable times and locations, or make contact via telephone, to discuss the
results of the Development Plan and activities which have transpired since the
previous meeting.
4.6 DEVELOPMENT TOOLS FOR LICENSEES. In connection with the Company
Products, Company shall endorse SGI computer systems and development tools as
the systems and development tools of choice to be used by Licensees. At a later
time, SGI and Company will meet and confer and agree in writing on whether SGI
will distribute such computer system and development tools directly to Licensees
or whether Company will acquire such systems and tools and distribute them to
Licensees. SGI and Company will mutually agree on how and when development
specifications are provided to the Licensees.
4.7 COMPANY PRODUCT INTRODUCTIONS. Company shall have the sole
discretion to decide whether, when and how to sell Company Products. If Company
does not make first commercial sales of Consumer Hardware incorporating
Developed Technology before December 31, 1996, then the provisions of Section
6.4 shall terminate, and SGI's rights in the Developed Technology shall be as
provided in Section 6.1. The preceding date presumes SGI's timely performance of
each and every aspect of the Development Plan. If SGI is untimely in performance
under the Development Plan, such date shall be considered to be extended for a
period equivalent to the period of SGI's delay in its performance under the
Development Plan. Company presently contemplates that the Consumer Hardware
should have a suggested retail price of less than U.S. $250 to be successful,
but that such suggested retail price may change.
5. BACKGROUND TECHNOLOGY
5.1 DEVELOPMENT AND EMBEDDED BACKGROUND TECHNOLOGY LICENSES. SGI hereby
grants to Company, and Company hereby accepts, (i) a nontransferable, royalty-
free temporary license to use the Licensed Background Technology only to the
extent necessary to permit Company to participate in the Development Plan and
only for so long as the parties are developing the Developed Technology pursuant
to the Development Plan, and (ii) a worldwide, royalty-bearing license to use
the Licensed Background Technology only to the extent specifically implemented
in the Developed Technology for purposes of the design, manufacture, use, sale
and distribution of Company Products. Except as specifically provided in this
Agreement, nothing in this Agreement shall authorize or entitle Company to
manufacture any products using the Background Technology, and no implied
licenses to use or to sublicense the Background Technology are granted under
this Agreement by implication, estoppel or otherwise. Subject to the written
agreement of Company and SGI on the compensation payable by Company to SGI,
Company shall also have the right to acquire from SGI a nonexclusive license to
use the Licensed Background Technology in connection with the design,
manufacture, use and sale of Theme Park Application Systems.
5.2 COMPANY SUBLICENSES. Company shall have the right to grant
nonexclusive sublicenses to Licensees to use the Licensed Background Technology,
to the extent specifically implemented in the Developed Technology, in
connection with the design, manufacture use, sale and/or distribution of
Packaged Software, Accessories, Coin Operated Software and/or Coin Operated
Hardware, provided that all such sublicenses shall be in writing and shall be
pursuant to a form of agreement incorporating license grant and proprietary
rights provisions approved in writing by SGI, whose approval shall not be
unreasonably withheld.
5.3 SUPPLY OF PRODUCTS INCORPORATING PURCHASABLE BACKGROUND TECHNOLOGY.
To the extent that Company and/or
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Licensees require equipment, software and/or components (including standard
and/or customized MIPS microprocessors) incorporating the Purchasable Background
Technology for purposes of the design, manufacture, use, sale or distribution of
Company Products, SGI shall arrange for the supply by SGI and/or its licensees
of the requirements of Company and such Licensees for such SGI equipment and/or
components on SGI's or SGI's licensees' standard commercial terms and
conditions, as modified and agreed to by the Company and SGI or the applicable
SGI licensee.
5.4 MANUFACTURE OF COMPANY PRODUCTS. Company is free to choose,
negotiate the price with, and direct the work of manufacturers of any
Application Specific Integrated Circuits ("ASICs") incorporated in the Company
Products, subject to the manufacturer's ability to use necessary design rules
and process technology, and to the manufacturer(s) agreement to protect SGI's
intellectual property, and such manufacturer XXXXXX in connection with its
manufacture of ASICs for exclusive sale to Company or Licensees. Company is free
to choose, negotiate the price with, and direct the work of, all of the
manufacturers of all other components of Company Products.
6. RIGHTS IN DEVELOPED TECHNOLOGY
6.1 JOINT OWNERSHIP. SGI and Company shall jointly own, in equal,
undivided shares (and each party hereby assigns to the other an equal, undivided
interest in), all right, title and interest in the Developed Technology (whether
developed in whole or in part by SGI or by Company), and title to all patents,
copyrights, mask work rights and other applicable statutory intellectual
property rights issued thereon shall be joint. Except as expressly set forth in
this Agreement, either party will have the unrestricted right to use the
Developed Technology and to license any third party to use the Developed
Technology without the consent of the other party, and without any duty to
account to or to share proceeds with the other party on account of such use or
licensing of the Developed Technology.
6.2 COOPERATION OF THE PARTIES IN FILINGS. The parties shall cooperate
in Filings, and Company shall bear all out-of-pocket expenses with respect
thereto. All Filings will be made at a time when appropriate during the
development or after the completion of an item of Developed Technology under the
names of both parties as joint owners. Company shall have the primary
administrative responsibility for Filings, and Company shall bear all filing and
attorneys' fees incurred in connection therewith. As used herein,
"administrative responsibility" means the physical preparation of any documents
required for a Filing, and the submission thereof to the appropriate
governmental entity. If SGI has not yet received a proposed Filing from Company
on an item of Developed Technology, and SGI believes that a Filing should be
made with respect thereto, SGI may submit a written request to Company that
Company proceed with the preparation of such Filing, provided, however, that
Company may, at its sole discretion, proceed or decline to proceed with the
preparation of such Filing. If Company declines to prepare and submit a Filing,
SGI may proceed with the preparation and submission of such Filing at SGI's
expense. In either case, a party preparing a Filing shall submit such Filing to
the other party for its review and approval prior to any submission to any
governmental entity. A Filing shall be deemed accepted by the receiving party if
the receiving party does not provided a written notice of rejection to the
submitting party within thirty (30) days after the submitting party's notice
thereof. If a party rejects a Filing, it shall include with its rejection notice
a detailed description of its reason(s) for rejection, and shall make specific
suggestions as to any modifications which it believes should be made to the form
or content of such Filing prior to submission. If the submitting party believes
that the modifications suggested by the receiving party are inappropriate, the
submitting party's Coordinator shall contact the receiving party's Coordinator,
and the Coordinators shall arrange and hold a meeting or discussion between
appropriate representatives of the parties, at a mutually agreeable time and
place, in order to determine a mutually acceptable form, content and time for
the proposed Filing. Each party shall provide the other with copies of any
correspondence, materials or other communications submitted to or received from
a governmental entity or a third party relating to any Filing.
6.3 FURTHER COOPERATION. Each party will take all steps necessary to
convey to the other party joint ownership rights in the Developed Technology and
to establish, evidence, maintain, defend and enforce the intellectual property
rights therein. Without charge to the other party, each party shall give the
other party all reasonable assistance in obtaining such proprietary rights
protection and in preparing and prosecuting any patent, copyright, mask work or
other filing or application made by the other party, provided that such
assistance does not require any out-of-pocket expenditure by the party providing
such assistance. Each party shall cause to be executed assignments and all other
instruments and documents as the other party may consider necessary or
appropriate to carry out the intent of this Section 6.3.
6.4 EXCLUSIVITY. The licenses hereby granted by SGI to Company shall be
non-exclusive, except as provided in this Section 6.4, which is subject to
Sections 4.7 and 7.6:
a. Competitive Companies. During the term of this Agreement, SGI
shall not enter into joint development efforts with or grant a license of the
Background Technology to the "Competitive Companies" for any product that is or
may play, contain or use a Game. The "Competitive Companies" are the companies
listed in Attachment D and any Affiliate of any of such companies, or any
successor of such companies (e.g. by way of merger, consolidation,
reorganization, transfer of assets or otherwise). Nothing in the preceding
sentence shall restrict SGI's direct or indirect sale of the Purchasable
[XXXXXX]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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Background Technology to the Competitive Companies.
b. Developed Technology. During the term of this Agreement, SGI
shall not, directly or indirectly, grant a license of the Developed Technology
to any third party (including but without limitation to the Competitive
Companies), and during the term of this Agreement, SGI shall not itself use the
Developed Technology except as provided in Section 6.5.
c. Substantially Similar Developed Technology. From the Effective
Date through one (1) year from the date of introduction of Company's Consumer
Hardware incorporating Developed Technology, SGI will not enter into a joint
development agreement with any Person to customize specifically for that Person
technology substantially similar to the Developed Technology for use in a
hardware product (whether or not specifically marketed as a "multimedia"
product) designed primarily to play Games, directly competitive with Company's
Consumer Hardware (incorporating the Developed Technology), and having a
suggested retail price of less than Seven Hundred Dollars ($700), if applicable.
d. For purposes of Sections 6.4 and 6.5, "Game" means any aurally-
and visually-oriented interactive application game software. "Games" may be
played by one or more players at a time; may coordinate graphics with fanciful
tunes or thematically significant music, along with incidental sound effects;
may feature special effects; may be designed to keep score, record milestones,
or otherwise track the progress or achievement of the players in terms of
numbers or with respect to the fictional narrative of the game environment; and
are intended to amuse and entertain. Examples of Games include: Tetris and
Super Mario Bros. 3, both of which are distributed for play on the Nintendo
Entertainment System; Sonic the Hedgehog II, distributed for play on the Sega
Genesis Video Game System; Street Fighter II and NCAA Basketball, both of which
are distributed for play on the Super Nintendo Entertainment System.
6.5 EXCEPTIONS TO COMPANY EXCLUSIVITY Notwithstanding the provisions of
Section 6.4(b), SGI shall itself be permitted to sell equipment or hardware that
incorporates the Developed Technology if: (a) such equipment or hardware does
not play, contain, or use a Game; or (b) such equipment or hardware plays,
contains or uses a Game and the wholesale cost of such equipment or hardware is
$1,000 or more. Except as explicitly provided to the contrary in this
Agreement, SGI shall have no obligation to restrict, or to attempt to restrict
the use or disposition by SGI customers or equipment, software or components
sold or licensed directly or indirectly from SGI.
6.6 THIRD PARTY SOFTWARE. The parties acknowledge that (a) they do not
currently contemplate that the Developed Technology will incorporate any third
party software, and (b) neither SGI nor Company shall incorporate any third
party software into the Developed Technology unless the parties have previously
agreed in writing on the incorporation of such software into the Developed
Technology and the allocation of responsibility for any associated royalties or
license fees.
7. PAYMENTS
7.1 DEVELOPMENT FUNDING. Provided that this Agreement does not terminate
on or before January 31, 1994, as provided in Section 4.2, during the twenty-
four (24) month period after the Effective Date, NCL shall pay (or at NCL's
election, it shall direct NOA to pay) to SGI the development funding agreed upon
pursuant to Section 4.2, which shall consist of development fees and prepaid
royalties, in the proportions provided in Attachment C. Company shall make the
initial payment specified in Attachment C within five (5) days of the Effective
Date as the initial nonrefundable installment of such development fees. The
balance shall be paid in six (6) equal, non-refundable quarterly installments
beginning on February 1, 1994, and every three (3) months thereafter.
7.2 ROYALTIES. NCL shall pay (or at NCL's election, it shall direct NOA
to pay) to SGI royalties on net sales (gross shipments less returns) of Company
Products as provided in Attachment C. If Company plans to distribute
application software for Consumer Hardware incorporating Developed Technology
electronically, Company and SGI shall agree in writing on royalties payable by
Company for such software as a condition to the electronic distribution of such
software by Company or any Licensee.
7.3 ACCRUALS. All royalties payable by Company under Section 7.2 shall
accrue as follows: (i) for Consumer Hardware, Packaged Software, and Coin
Operated Hardware sold by NCL or any of its Affiliates, the sale shall occur
when NCL or such Affiliate sells the Consumer Hardware, Packaged Software, or
Coin Operated Hardware to its distributor or retailer, (ii) for Packaged
Software manufactured by NCL and sold by Licensees, the sale occurs when the
Packaged Software is sold by NCL to such Licensees, (iii) for Packaged Software
manufactured by Licensees and sold by the Licensees, the sale occurs when the
Packaged Software is sold by the Licensees to their distributors or retailers,
(iv) for Coin Operated Hardware sold by Licensees, the sale shall occur when the
Coin Operated Hardware is sold by the Licensees to its distributors or
retailers. For purposes of this Section 7.3, a product shall be considered
"sold" upon the earlier of the seller's shipment of or invoice for that product.
7.4 QUARTERLY PAYMENTS AND STATEMENTS. Within thirty (30) days after the
end of each calendar quarter during the term of this Agreement, NCL shall pay
(or at NCL's election it shall direct NOA to pay) to SGI all royalties that have
accrued during that quarter pursuant to Section 7.3. Each such payment shall be
accompanied by a written statement, certified to be accurate by an officer of
Company, showing the total net sales for Coin Operated Hardware, Consumer
Hardware and Packaged Software, broken down by Company Product categories, the
royalties payable by Company, and such additional
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information as SGI may reasonably request regarding the sale of Company
Products.
7.5 RECORDS AND AUDITS. During the term of this Agreement and for a
period of two (2) years following any expiration or termination of this
Agreement, Company shall maintain full and complete records in sufficient
detail to permit SGI to verify the accuracy of payment and statements submitted
by Company pursuant to Section 7.4. Upon reasonable notice, and no more
frequently than once in any calendar year, SGI or its certified public
accountants shall have the right to audit Company's records for the purpose of
verifying the accuracy of payments made by Company under Section 7.4. All such
audits shall be at SGI's expense, unless the audit reveals an underpayment by
Company of five percent (5%) or more in any royalty period, in which case
Company shall reimburse SGI the reasonable and documented costs of the audit.
Company shall promptly pay to SGI all underpayments disclosed by the audit,
together with interest on all overdue amounts equal to one percent (1%) per
month.
7.6 MINIMUMS FOR EXCLUSIVITY. As a condition to the continuation of
Company's rights under Section 6.4, Company shall have had royalties accrued as
provided for in Section 7.3 in an amount equal to the minimum royalties set
forth in Attachment E (provided Company thereafter makes payment of such
royalties to SGI in accordance with Section 7.4). If royalties accrued during
the applicable year do not equal or exceed the minimum royalties for that year
set forth in Attachment E, Company shall have the right, in its sole discretion,
to continue its exclusivity rights as provided in Section 6.4, to make up the
shortfall concurrently with its payment of royalties for the calendar quarter in
which the applicable year referred to in Attachment E concludes.
7.7 TAXES AND THE LIKE. Any payments made hereunder are net and exclusive
of all taxes, insurance, shipping and other charges. Company agrees to pay or
reimburse SGI for all sales, use, value added, or other taxes, duties,
importation fees or assessments with respect to this Agreement (excluding only
taxes based on the payee's net income), or shall supply appropriate tax
exemption certificates in form satisfactory to the taxing authority. The
development fees and advance royalties payable under Section 7.1 shall be
exclusive of all withholding taxes imposed by the laws of Japan. NCL shall be
entitled to withhold and deduct from royalties payable under Section 7.2
withholding taxes imposed by the laws of Japan on the remission of royalties to
the United States, provided that Company shall claim the benefits of the Treaty
on the Avoidance of Double Taxation between Japan and the United States, and
shall provide SGI with certificates of such withholding.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
8.1 CONFIDENTIALITY OF BACKGROUND TECHNOLOGY. Company acknowledges SGI's
representation that the Background Technology constitutes the valuable
proprietary and confidentiality information of SGI, and agrees to (i) retain in
confidence the Background Technology, (ii) restrict the use of and access to the
Background Technology to its employees to whom disclosure is necessary in
connection with the license granted in this Agreement and to authorized
sublicensees and subcontractors, (iii) appropriately bind each employee to whom
any such disclosure is made to hold the Background Technology in confidence, and
(iv) not sell, lease transfer or otherwise disclose the Background Technology to
any third party except in accordance with Section 5.0, provided, however, that
Company may disclose the Background Technology to its agents or consultants
under the terms and conditions of a signed, written confidential disclosure
agreement with terms and conditions which prohibit disclosure to other
parties, and which are otherwise at least as restrictive as the terms of
subsections (i) - (iii) of this Section 8.1. Without limiting the foregoing,
Company agrees that it will treat the Background Technology with at least the
same degree of care as it would its own highly proprietary information.
8.2 NO TRANSFER OF INTELLECTUAL PROPERTY. No right, title or interest in
or to the intellectual property in any Background Technology or any copies,
derivations or any portion of the Background Technology is transferred to
Company under this Agreement and/or as a result of Company's use of SGI's
Background Technology under any circumstances whatsoever. SGI is and shall
remain the sole and exclusive owner of the Background Technology. Company shall
remain the exclusive owner of all rights in the Company Technology.
8.3 NO TRANSFER OF RIGHTS IN TRADEMARKS. Nothing herein shall grant
either party any right, title or interest in the trade names, trademarks,
service marks, words, symbols, or other marks used, adopted or owned by the
other party (or of any third party from whom such party has acquired license
rights) from time to time, either alone or in association with other words or
names. Each party shall be free to unilaterally adopt and use trademarks for
use in conjunction with its marketing, distribution, licensing and sale of
products, provided that such trademarks do not infringe trademarks owned by the
other party.
8.4 PROPRIETARY RIGHTS NOTICES. Company shall not remove from, cover over
or prevent from being displayed the notices of SGI's copyright, trade secrets
and proprietary rights notices printed on the Background Technology, affixed to
the media or containers of the Background Technology or the Developed
Technology, embedded in the Background Technology, displayed by the Background
Technology during use, or printed on materials comprising the Background
Technology. Company acknowledges that the existence of such notice(s) does not
mean that the Background Technology or the trade secrets and proprietary
information therein have been published or otherwise made public.
8.5 NO DISCLOSURE OF AGREEMENT. Neither party shall disclose the terms
and conditions or existence of this Agreement without
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the prior written approval of the other party, except as may be required by law
or regulation.
8.6 EXCLUSIONS. Neither party shall have any obligation as to information
of the other party or technology, which may include Background Technology, that
(i) is known to the receiving party at the time of disclosure; or (ii) is
independently developed by the receiving party; or (iii) becomes known to the
receiving party from another source without confidentiality restriction on
subsequent disclosure or use; or (iv) is or becomes part of the public domain
through no wrongful act of the receiving party; or (v) is disclosed pursuant to
any judicial or governmental request, requirement or order; provided that the
receiving party takes reasonable steps to give the disclosing party sufficient
prior notice in order to contest such request, requirement or order; or (vi) is
furnished to a third party by the disclosing party without a similar
confidentiality restriction on such third party.
8.7 INJUNCTIVE RELIEF. Each party acknowledges and agrees that in the
event of an unauthorized use, reproduction, distribution or disclosure of any
confidential information or data contained in the technology of the other party,
an adequate remedy at law may not be available, and therefore, injunctive or
other equitable relief would be appropriate to restrain such use, reproduction,
distribution or disclosure, threatened or actual
8.8 RESIDUALS. Notwithstanding any provision of this Section 8.0 or any
other provision of this Agreement to the contrary, neither party shall be
prohibited from, or be subject to liability for, using for any purpose the
"residuals" from the activities conducted in furtherance of the Development Plan
and from the use of or access to information or materials developed or received
hereunder, including, without limitation, any Technology. For purposes of this
Section 8.8, "residuals" means the know-how, techniques, ideas and other
intangible information that remain within the general knowledge and experience
of personnel who have participated in such activities and used or had access to
such information or materials.
9. WARRANTIES AND EXCLUSIONS
9.1 "AS IS." SGI PROVIDES THE BACKGROUND TECHNOLOGY TO COMPANY ON AN "AS-
IS" BASIS ONLY, AND DOES NOT WARRANT OR REPRESENT THAT THE OPERATION OF THE
BACKGROUND TECHNOLOGY WILL BE UNINTERRUPTED OR ERROR FREE, THAT ANY DEFECTS IN
THE BACKGROUND TECHNOLOGY ARE CORRECTABLE OR WILL BE CORRECTED, OR THAT THE USE
THEREOF WILL BE FREE FROM CLAIMS OF INFRINGEMENT.
9.2 WARRANTY EXCLUSION. NEITHER PARTY PROVIDES ANY WARRANTY WHATSOEVER TO
THE OTHER PARTY WITH RESPECT TO THE DEVELOPED TECHNOLOGY. Nothing contained in
this Agreement shall be construed as a warranty or representation by either
party that any manufacture, use, sale, lease or other disposition of the
Developed Technology will be free from infringement of any patent or other
proprietary right of any third party.
9.3 REPRESENTATIONS AND WARRANTIES.
a. By Company. Company represents and warrants to SGI as follows:
(i) This Agreement has been duly executed and delivered by
Company and is the valid and binding obligation of Company enforceable in
accordance with its terms. No approval or consent of any foreign, federal,
state, county, local, or other governmental or regulatory body, and no approval
or consent of any other Person is required in connection with the execution and
delivery by Company of this Agreement and the consummation and performance by
Company of the transactions contemplated hereby; and
(ii) The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby will not result in
a material breach or violation of or constitute (or with notice or lapse of time
or both would constitute) a default under: [1] the Articles of Incorporation,
any amendments to it, or the bylaws of Company; [2] any instrument, contract, or
other agreement to which Company is a party or by or to which Company or any of
its assets or properties is bound or subject; or [3] any order, judgment,
injunction, award, or decree of any court, arbitrator or governmental or
regulatory body against or binding upon or applicable to Company or upon the
securities, properties, and businesses of Company.
b. By SGI. SGI represents and warrants to Company as follows:
(i) This Agreement has been duly executed and delivered by SGI
and is the valid and binding obligation of SGI enforceable in accordance with
its terms. No approval or consent of any foreign, federal, state, county, local,
or other governmental or regulatory body, and no approval or consent of any
other Person is required in connection with the execution and delivery by SGI of
this Agreement and the consummation and performance by SGI of the transactions
contemplated hereby; and
(ii) The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby will not result in
a material breach or violation of or constitute (or with notice or lapse of time
or both would constitute) a default under: [1] the Articles of Incorporation,
any amendments to it, or the bylaws of SGI; [2] any instrument, contract, or
other agreement to which SGI is a party or by or to which SGI or any of its
assets or properties is bound or subject; or [3] any order, judgment,
injunction, award, or decree of any court, arbitrator or governmental or
regulatory body against or binding upon or applicable to SGI or upon the
securities, properties, and businesses of SGI.
(iii) As of the Effective Date, no action, suit, or proceeding is
currently pending before any court or governmental or regulatory body claiming
that the Background Technology infringes or misappropriates the intellectual
property rights of any third party.
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9.4 DISCLAIMER. THE FOREGOING WARRANTIES ARE IN LIEU OF, AND EACH PARTY
DISCLAIMS, ANY OTHER WARRANTIES, EXPRESS, IMPLIED OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NONINFRINGEMENT.
9.5 SGI INTELLECTUAL PROPERTY INDEMNIFICATION. SGI will defend,
indemnify, and hold harmless Company and its Affiliates, directors, officers,
employees and agents against any claim, suit or proceeding alleging that the
Background Technology or SGI's contributions to the Developed Technology or use
thereof infringes or misappropriates any U.S. OR Japanese copyright, mask work,
trade secret, patent or other intellectual property, proprietary or contract
rights of any third party and against any damages or liability resulting from
such claim, suite or proceeding, including, without limitation, reasonable
attorneys' fees and other costs and expenses, provided that (i) Company gives
SGI notice of the claim, suit or proceeding promptly after commencement thereof
(or, if later, promptly after Company learns that such claim, suit or proceeding
relates to the Background Technology or SGI's contribution to the Developed
Technology), (ii) SGI may not settle any claim, suit or proceeding without the
prior, written consent of Company which consent shall not be unreasonably
withheld, provided that if Company refuses to consent to settlement acceptable
to the plaintiff(s) and proposed by SGI to Company, SGI's total liability under
this Section 9.5 shall be limited to the amount of the proposed settlement and
attorney's fees incurred as of the date of SGI's request for Company's consent,
and (iii) Company provides SGI with all reasonable assistance requested by SGI
in connection with the defense and/or resolution of any such claim, suit or
proceeding, at SGI's expense. Notwithstanding the defense obligation of SGI
under this Section 9.5, Company shall have the right, at its own expense, to
appoint its own counsel to participate in any claim, suit or proceeding, and SGI
shall cooperate with Company and such counsel. If there is a final
determination of infringement or misappropriation, SGI shall, at its option, use
reasonable efforts to, (i) replace or modify any component of the Background
Technology or SGI's contribution to the Developed Technology with a functionally
equivalent noninfringing component that conforms to the requirements of this
Agreement, or (ii) obtain a license for Company to use such Background
Technology or SGI's contribution to the Developed Technology. Notwithstanding
the foregoing, SGI shall have no liability for a claim, suit or proceeding to
the extent based on (a) modification of the Background Technology or SGI's
contribution to the Developed Technology by or for Company (other than by SGI),
or (b) Company's use of the Background Technology or SGI's contribution to the
Developed Technology with Accessories not supplied by SGI, or (c) Company's use
of a version of the Background Technology or SGI's contribution to the Developed
Technology that was not at the time of use the most recent version provided by
SGI to Company. For purposes of this Section 9.5, SGI's contributions to the
Developed Technology shall include any technology developed by SGI
subcontractors. SGI'S LIABILITY UNDER THIS SECTION 9.5 SHALL IN NO EVENT EXCEED
THE DEVELOPMENT FEES AND ROYALTIES PAID BY COMPANY TO SGI UNDER THIS AGREEMENT.
9.6 COMPANY INTELLECTUAL PROPERTY INDEMNIFICATION. Company will defend,
indemnify, and hold harmless SGI and its Affiliates, directors, officers,
employees and agents against any claim, suit or proceeding alleging that the
Company contributions to the Developed Technology or use thereof infringes or
misappropriates any U.S. or Japanese copyright, mask work, trade secret, patent
or other intellectual property, proprietary or contract rights of any third
party and against any damages or liability resulting from such claim, suite or
proceeding, including, without limitation, reasonable attorneys' fees and other
costs and expenses, provided that (i) SGI gives Company notice of the claim,
suit or proceeding promptly after commencement thereof (or, if later, promptly
after SGI learns that such claim, suit or proceeding relates to the Company
contributions to the Developed Technology), (ii) SGI gives Company sole
authority to defend and/or resolve any such claim, suit or proceeding or the
portion thereof relating to the Company contributions to the Developed
Technology, and (iii) SGI provides Company with all reasonable assistance
requested by Company in connection with the defense and/or resolution of any
such claim, suit or proceeding, at Company's expense. Notwithstanding the
defense obligation of Company under this Section 9.6, SGI shall have the right,
at its own expense, to appoint its own counsel to participate in any claim, suit
or proceeding, and Company shall cooperate with SGI and such counsel.
Notwithstanding the foregoing, Company shall have no liability for a claim, suit
or proceeding to the extent based on (a) modification of the Company
contributions to the Developed Technology or (b) SGI's use of the Company
contributions to the Developed Technology with equipment or components not
supplied by Company. For purposes of this Section 9.6, Company's contributions
to the Developed Technology shall include any technology developed by Company
subcontractors. COMPANY'S LIABILITY UNDER THIS SECTION 9.6 SHALL IN NO EVENT
EXCEED THE DEVELOPMENT FEES AND ROYALTIES PAID BY COMPANY TO SGI UNDER THIS
AGREEMENT.
10. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OF
ANY KIND, (INCLUDING WITHOUT LIMITATION LOSS OF PROFIT OR DATA) WHETHER OR NOT
ADVISED OF THE POSSIBILITY OF SUCH LOSS, HOWEVER CAUSED, WHETHER FOR BREACH OR
REPUDIATION OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, INABILITY TO USE THE
BACKGROUND OR DEVELOPED TECHNOLOGY, OR OTHERWISE. IN NO EVENT SHALL
Page 9 of 16
<PAGE>
THE AGGREGATE LIABILITY OF EITHER PARTY TO THE OTHER EXCEED THE TOTAL AMOUNT
PAYABLE BY COMPANY TO SGI UNDER THIS AGREEMENT. THE ESSENTIAL PURPOSE OF THIS
PROVISION IS TO LIMIT THE POTENTIAL LIABILITY OF THE PARTIES ARISING OUT OF THIS
AGREEMENT AND/OR LICENSE.
11. TERM; TERMINATION.
11.1 TERM. This Agreement shall commence on the Effective Date, and shall
expire ten (10) years from the date of Company's first commercial shipment of a
Coin Operated Hardware or Consumer Hardware incorporating Developed Technology,
whichever is first, provided, however, that (i) the development stage of this
Agreement shall expire in accordance with the Development Plan, (ii) this
Agreement may be terminated earlier in accordance with Section 4.2, and (iii)
this Agreement may be terminated earlier in accordance with Section 11.2.
Company shall have the right to renew this Agreement for an additional five-year
period; provided (i) that, during the initial term of this Agreement, Company
has paid royalties to SGI in the amount set forth on Attachment E; and (ii) that
Company and SGI agree on royalty rates applicable to such five (5)-year term
(Company and SGI agree to negotiate such royalties in good faith).
11.2 TERMINATION FOR BREACH. If either party materially breaches any of
its obligations under this Agreement, upon sixty (60) days written notice
specifying such breach in detail, the notifying party may terminate this
Agreement, and all rights or licenses granted by the notifying party to the
breaching party hereunder, unless the breach specified in such notice has been
cured during the sixty (60) day period, or unless the breaching party is making
diligent efforts to cure a breach that is not reasonably susceptible of cure
within sixty (60) days. Notwithstanding the foregoing, Company shall be
obligated to cure any breach of any monetary obligations to SGI within thirty
(30) days of its receipt of notice of the breach. In the event of a termination
for breach, all licenses in Background Technology granted to the notifying party
hereunder prior to the effective date of such termination shall continue in full
force and effect.
11.3 EFFECT OF TERMINATION. In any event of termination under Section
11.2, the nonbreaching party shall be entitled to retain any Developed
Technology which it has received or developed to the date of such termination,
and all sublicenses granted by either party prior to the date of such
termination shall remain in effect.
11.4 SURVIVAL. The rights and obligations of the parties under Sections
6.1 (JOINT OWNERSHIP), 8.0 (PROPRIETARY AND CONFIDENTIAL INFORMATION), 9.0
(WARRANTIES AND EXCLUSIONS), 10.0 (LIMITATION OF LIABILITY), 11.2, 11.3, 11.4,
12.0, and 13.1 shall survive and continue after any termination or expiration of
this Agreement or termination of any license or rights under this Agreement, for
any reason whatsoever.
12. EXPORT. Notwithstanding any rights, license or privileges specified in
this Agreement, each party agrees that it will not export any technology
provided by the other party hereunder or jointly developed hereunder, or any
part thereof, either directly or indirectly, without first obtaining any
required licenses to so export from the United States Government, and further
agrees that it will comply with all laws, rules and regulations applicable to
the export or reexport of such technology.
13. GENERAL.
13.1 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California, excluding its choice of
law rules. Company hereby consents to the jurisdiction of the federal courts
located in the Northern District of California over any dispute between SGI and
Company arising out of or in connection with this Agreement, and waives any
other venue to which it may be entitled by virtue of domicile or otherwise.
13.2 SEVERABILITY. In the event that any one or more of the provisions of
this Agreement shall for any reason be held to be unenforceable in any respect
under any federal or state law, such unenforceability shall not affect any other
provision, but this Agreement shall then be construed as if such unenforceable
provision or provisions had never been contained herein, provided that in such
event the parties agree to negotiate in good faith substitute enforceable
provisions which most nearly effect the parties original intent in entering into
this Agreement.
13.3 ASSIGNMENT. Except as specifically provided to the contrary in this
Agreement, this Agreement and the licenses granted hereunder are to a specific
entity or legal person, and all rights hereunder are not assignable nor are the
obligations imposed delegable by either party without the prior written consent
of the other party which shall not be unreasonably withheld.
Page 10 of 16
<PAGE>
13.4 MODIFICATION. This Agreement may be modified only by a writing
signed by each party.
13.5 NONWAIVER. The failure of either party to enforce at any time any of
the provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce any such provisions.
13.6 NO AGENCY. This is a development and license agreement; no agency,
partnership, joint venture or other relationship is created hereby, and neither
party has any authority of any kind to bind the other party in any respect
whatsoever.
13.7 FORCE MAJEURE. Except for Company's obligations under Section 7
above, notwithstanding anything else in this Agreement, no default, delay or
failure to perform on the part of either party shall be considered a breach of
this Agreement, if such default, delay, or failure to perform is shown to be due
entirely to causes beyond the reasonable control of the party charged with a
default, including, but not limited to, causes such as strikes, lockouts or
other labor disputes, riots, civil disturbances, actions or inactions of
governmental authorities or suppliers, epidemics, war, embargoes, severe
weather, fire, earthquakes, acts of God or the public enemy, nuclear disasters,
or default of a common carrier.
13.8 NOTICES. All notices, reports, statements and approvals ("Notices")
which either party is required or permitted to give under this Agreement shall
be sufficiently given when the same shall be: (a) personally served or delivered
to the party entitled to such Notice; or (b) deposited, postage prepaid, with a
guaranteed international or domestic air courier service, addressed to the
person and address stated herein, or to such other person or address as may be
provided in a written notice by either party to the other; or (c) when
transmitted by facsimile with an original sent concurrently by first class mail
(or guaranteed international or domestic air courier service), addressed to the
person, facsimile number, and address stated above, or to such other person,
address or facsimile number as may be provided in a written notice by either
party to the other. Notice shall be deemed effective upon the earlier of actual
receipt or three (3) business days after mailing or transmittal.
13.9 SECTION HEADINGS AND CAPTIONS. The parties agree that the Section or
paragraph headings and captions used in this Agreement are for reference
purposes only and shall not be used in the interpretation of this Agreement.
13.10 EXECUTION IN COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be an original instrument, but all of
which shall constitute one and the same agreement. A facsimile signature shall
have the same force and effect as an original signature.
13.11 ENTIRE AGREEMENT. This Agreement supersedes all proposals oral or
written, all negotiations, conversations or discussions between the parties
relating to this Agreement and all past course of dealing or industry custom,
including the Nondisclosure Agreement between Company and SGI. It is expressly
understood and agreed that, because the parties hereto, no usage of trade or
other regular practice or method of dealing, either within the computer
industry, the software industry or between the parties hereto shall be used to
modify, interpret, supplement or alter in any manner the express terms of this
Agreement or any part hereof.
SGI: COMPANY:
SILICON GRAPHICS, INC. NINTENDO CO., LTD.
By: /s/ Wei Yen By: /s/ Mr. Hiroshi Yamauchi, President
---------------------------- ------------------------------------
Name: Wei Yen
-------------------------
Title: Senior Vice President
---------------------
MIPS TECHNOLOGIES, INC. NINTENDO OF AMERICA INC.
By: /s/ Wei Yen By: /s/ Mr. Minoru Arakawa, President
---------------------------- ------------------------------------
Name: Wei Yen
--------------------------
Title: President
-------------------------
Page 11 of 16
<PAGE>
ATTACHMENT A
BACKGROUND TECHNOLOGY
"Background Technology" means the MIPS Multimedia Engine, including the MIPS
microprocessor architecture and instruction set, graphics library, video library
and audio library, and SGI and MIPS API and ABI and any other Technology (a)
developed prior to the Effective Date of (b) under development at SGI as of the
Effective Date and supplied by SGI to Company in connection with the development
of the Company Products.
Page 12 of 16
<PAGE>
ATTACHMENT B
DEVELOPED TECHNOLOGY
"Developed Technology" means the following technology, to the extent developed
under this Agreement and delivered by SGI to Company pursuant to the Development
Plan in connection with the development of the Company Products: XXXXXX for
Company Products.
Page 13 of 16
<PAGE>
ATTACHMENT C
DEVELOPMENT FUNDING AND ROYALTIES
DEVELOPMENT FUNDING: To be agreed pursuant to Section 4.2
ADVANCE AGAINST ROYALTIES:
XXXXXXXXX of the development funding paid to SGI, up to XXXXXXXX
pursuant to Sections 4.2 and 7.1, shall be deemed an advance against
royalties. All development funding in excess of XXXXXXXXXX paid to SGI
pursuant to Sections 4.2 and 7.1 shall be deemed an advance against
royalties.
INITIAL PAYMENT: XXXXXXX (such initial payment shall be considered all
development fees, and not an advance against royalties).
ROYALTIES:
a) XXXXXXXXX for each Coin Operated Hardware incorporating Developed
Technology sold by Company or Licensee;
b) XXXXXXXXX for each of the first Ten Million (10,000,000) units of
Consumer Hardware incorporating Developed Technology sold by Company;
and
c) XXXXXXXXX for each Packaged Software sold by Company or a Licensee for
use on a Consumer Hardware incorporating Developed Technology.
No royalties are payable on Coin Operated Software or Accessories or system
software upgrades.
[XXXXXX]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
Page 14 of 16
<PAGE>
ATTACHMENT D
COMPETITIVE COMPANIES
1. Sega Enterprises, Ltd.
2. Sega of America, Inc.
3. Atari Corp.
4. 3DO Company
Page 15 of 16
<PAGE>
ATTACHMENT E
MINIMUMS FOR EXCLUSIVITY
<TABLE>
<CAPTION>
MINIMUM ROYALTIES PER YEAR
YEAR (IN MILLIONS)
---- -------------
<C> <S>
2* XXXXXX
3 XXXXXX
4 XXXXXX
5 XXXXXX
6 XXXXXX
7 XXXXXX
8 XXXXXX
9 XXXXXX
10 XXXXXX
</TABLE>
. Ends 24 months after the date of first sale of the Consumer Hardware
incorporating Developed Technology.
[XXXXXX]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
Page 16 of 16
<PAGE>
EXHIBIT 10.7.2
CONFIDENTIAL
[XXXXXX]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
FIRST ADDENDUM TO
JOINT DEVELOPMENT AND LICENSE AGREEMENT
THIS IS A FIRST ADDENDUM TO THAT CERTAIN JOINT DEVELOPMENT AND LICENSE AGREEMENT
DATED AUGUST 20, 1993, (the "Original Agreement") among Nintendo Co., Ltd.
("NCL"), Nintendo of America Inc. ("NOA")(NCL and NOA are collectively referred
to as "Company"), Silicon Graphics, Inc., and MIPS Technologies, Inc.
(collectively referred to as "SGI").
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. The definitions in the Original Agreement are hereby
-----------
incorporated by reference in this FIRST ADDENDUM.
2. Budget. SGI has advised the Company that the budget for SGI's work under the
------
Development Plan is U.S. XXXXXXXXX (the "Budget"). The Budget represents SGI's
good faith calculation of its actual costs to complete its work under the
Development Plan which includes, but is not limited to, SGI's costs of personnel
resources, equipment costs for experimentation, development and CAD tools. The
Budget is stated as a flat fee (fixed fee) for the completion of SGI's work
under the Development Plan. Company hereby accepts the Budget and shall make
payment to SGI in accordance with Schedule B. SGI acknowledges that the Company
has already paid U.S. XXXXXXXXX of the Budget.
3. Development Plan. The parties agree to the Development Plan set forth on
----------------
Schedule A. The parties acknowledge that Section 4.4 of the Original Agreement
requires that the parties use "reasonable efforts" to develop the Developed
Technology substantially in accordance with the Development Plan attached as
Schedule A, or any revised Development Plan agreed upon by the parties,
including any applicable target dates.
Except as set forth herein, the Original Agreement is hereby ratified and
confirmed.
NINTENDO CO., LTD. NINTENDO OF AMERICA INC.
By: /s/ Hiroshi Yamauchi By: /s/ Minoru Arakawa
----------------------------- ---------------------------
Mr. Hiroshi Yamauchi Mr. Minoru Arakawa
President President
February 4, 1994 February 5th, 1994
SILICON GRAPHICS, INC. MIPS TECHNOLOGIES, INC.
By: /s/ Wei Yen By: /s/ Wei Yen
---------------------- ----------------------------
Name: Wei Yen Name: Wei Yen
Title: Senior Vice President Title: Chairman of the Board
February 4 , 1994 February 4 , 1994
Attachments: Schedules A, A-1, and B.
<PAGE>
FINAL: 2-3-94
SCHEDULE A
DEVELOPMENT PLAN
OBJECTIVES:
The objectives under this Development Plan are to develop and design:
1. Consumer Hardware that: (a) will have SGI-Class Graphics Performance (see
definition below) and other specifications to be identified by the parties, (b)
has a target date of September 1, 1995 for commercial shipment by Company to its
retailers and dealers so that Company can sell the Consumer Hardware during the
1995 holiday season, and (c) has a suggested retail price of U.S. $250 or less.
2. Coin-Operated Hardware, which will use an enhanced and/or modified version
of the Consumer Hardware LSI chip set, the specifications for which are to be
identified by the parties by mutual agreement.
3. Initial Emulation Unit(s) (defined herein) and its video game development
environments, which will allow the Company and a relatively small number of its
video game developers to proceed as quickly as possible to create exciting video
games (prior to the time that the Licensee Emulation Unit is available) so that
video games playable on the Consumer Hardware are ready for commercial shipment
simultaneously with the commercial shipment of the Consumer Hardware in order to
support a strong launch of the Consumer Hardware.
4. a Licensee Emulation Unit (defined herein) and its video game development
environments, which will be available to Company and its licensees in order to
create exciting video games playable on the Consumer Hardware.
PARTIES' TASKS:
1. LSI (LARQE SCALE INTEGRATED CIRCUIT) DESIGN FOR CONSUMER HARDWARE.
-----------------------------------------------------------------
A. DESCRIPTION: SGI shall be responsible for the LSI (Large Scale
Integrated circuit) design for the Consumer Hardware, which includes LSI's
verification, cost-conscious, testability, and reliability design for critical-
mass semiconductor production. The Consumer Hardware is expected to have SGI-
Class Graphics Performance, the current target specifications for which are set
forth in Schedule A1 (called Home Box Baseline), which target specifications set
forth the functionality of a hyper 2D application. SGI and Company acknowledge
that they will mutually agree on modifications and/or additions to the target
specifications in the Home Box Baseline to achieve the functionality of an
integrated architecture that is capable of both hyper 2D and 3D graphics for
video games. SGI and Company also acknowledge that, by mutual agreement, they
will modify functional specifications based on the affect of various functional
alternatives on the suggested retail price for the Consumer Hardware, the
desirability of the Consumer Hardware to the
<PAGE>
market, and the target dates set forth in this Development Plan. The parties
will jointly agree and approve the final design for the LSI chip set. The
parties do not know the number of LSI chips to be designed but consider the
range to be from two (2) to three (3) chips. Company contemplates that it will
designate one company (NEC) to be the only vendor for the LSI chip set until the
first commercial shipment by Company of the Consumer Hardware. Therefore, for
purposes of this Development Plan, SGI will be obligated to work with only one
vendor of the LSI chip set. The following are the function blocks to be included
in the chip(s):
(i) CENTRAL PROCESSING UNIT ("CPU").
-------------------------------
DESCRIPTION: The parties contemplate that the CPU will be a MIPS R4000
series or a derivative. If any customization is necessary, it will be done
by SGI, in consultation with Company and the CPU vendor selected by
Company. The customization, if any, would remove unnecessary functions from
the CPU, and add additional functions desirable for video games including,
but without limitation, security microcode for curbing counterfeiting of
video games.
(ii) GRAPHIC AND/OR AUDIO DIGITAL SIGNAL PROCESSOR ("DSP")
-----------------------------------------------------
DESCRIPTION: Programmable DSP which provides graphic geometry calculation
and other arithmetic calculations and/or sound signal generation, which
will be tuned with the CPU for maximum performance within the price
considerations.
(iii) GRAPHIC DRAWING ENGINE ("GDE").
------------------------------
DESCRIPTION: The GDE shall have SGI-Class Graphics Performance and other
specifications to be identified by the parties (including Company's
specifications relevant to video gaming).
(iv) DYNAMIC RANDOM ACCESS MEMORY ("DRAM") DEVICES.
---------------------------------------------
DESCRIPTION: The Consumer Hardware shall include an architecture for
efficient utilization of dynamic random access memory ("DRAM") devices.
(v) INPUT/OUTPUT ("I/O").
--------------------
DESCRIPTION: Input from game controller, joystick, microphone, etc. and
interface to game storage device (ROM cartridge, CD ROM, etc.), output to
sound DAC (Digital to Analog Converter), output to video DAC for a variety
of video output standards, input and output with expansion port, and input
and output with communication port. The parties contemplate that the I/O
interface will be integrated into the LSI chip set.
B. DELIVERABLES AND TARGET DATES.
(i) SGI Deliverable for the LSI chip set: First silicon. A block diagram
and technical documentation related to the design of the LSI chip set delivered
by SGI to the Company.
(ii) Target Dates:
<PAGE>
(a) Desirable Target Date for first silicon: January 1, 1995.
(b) Latest Target Date for first silicon: March 31, 1995.
(c) Desirable Target Date for finalizing the choice of DRAM: February 5,
1994.
(d) Latest Target Date for finalizing the choice of DRAM: March 15, 1994.
C. PAYMENT TO THIRD PARTY: To the extent any payment is required to be
paid to a third party for the LSI chip set, at SGI's expense, SGI shall be
responsible for making such payment (in an amount not to exceed U.S. XXXXXX
2. ENHANCED AND/OR MODIFIED VERSION OF LSI DESIGN FOR COIN-OPERATED HARDWARE.
-------------------------------------------------------------------------
DESCRIPTION: SGI shall be responsible for the enhancement of and/or
modification to the Consumer Hardware LSI for the Coin-Operated Hardware
LSI. The parties will meet and agree on the appropriate
revisions/modifications. The target date for meeting and reaching agreement
on the appropriate revisions/modifications is First Quarter 1994. The
parties will jointly agree and approve the final design for the enhanced
LSI for the Coin-Operated Hardware.
SGI DELIVERABLE: First silicon of enhanced Consumer Hardware LSI. A block
diagram and technical documentation for the LSI chip set
to be delivered by SGI to Company.
DESIRABLE TARGET DATE FOR SGI DELIVERABLE: To be agreed.
LATEST TARGET DATE FOR SGI DELIVERABLE: To be agreed.
3. ENGINEERING WORK/TECHNICAL INVESTIGATIONS.
-----------------------------------------
DESCRIPTION: Although Company shall be responsible for the design and
engineering of the Consumer Hardware and Coin-Operated Hardware through use
of SGl's LSI chip set, upon the request of Company, SGI shall provide
reasonable assistance to the Company in this process including, but without
limitation, by SGI making reasonable technical investigations for assessing
the feasibility of engineering options (e.g. investigating choice of
components), and by assisting the Company with the design and engineering
of the Consumer Hardware and Coin-Operated Hardware (e.g. designing PC
board artwork, FCC countermeasures, expandability through add-ons like an
CD ROM adapter). In addition, to the extent there is a design-originated
"bug" that occurs after the parties jointly approve the final LSI chip set,
SGI will provide technical advice on how to correct the problem.
SGI DELIVERABLE: Depends on the request made by the Company.
TARGET DATE FOR SGI DELIVERABLE: For the Consumer Hardware, SGI's
assistance will be on-going until the first commercial shipment of the
Consumer Hardware or final approval of the LSI chip set for the Consumer
Hardware, whichever occurs later. For the
<PAGE>
Coin-Operated Hardware, SGI's assistance with be on-going until the parties
jointly approve the final LSI design for the Coin-Operated Hardware.
4. INITIAL EMULATION UNITS.
-----------------------
DESCRIPTION: SGI shall be responsible for the design of emulation units of
the Consumer Hardware (the "Initial Emulation Units"), which shall consist
of the (i) First Initial Emulation Unit, and (ii) the Second Initial
Emulation Unit. The Initial Emulation Units shall be designed according to
the specifications agreed to by SGI and Company. The Initial Emulation
Units will be used by the Company and its video game developers to develop
initial games for play on the Consumer Hardware.
First Initial Emulation Unit. The parties contemplate that the First
----------------------------
Initial Emulation Unit will consist of a high-performance SGI system (e.g.
the Reality Engine) and software which will closely represent the
functionality of the Consumer Hardware. The parties agree that it is
important that the First Initial Emulation Unit provide a realistic "look
and feel" of the Consumer Hardware to be designed and have the approximate
clocktime of the Consumer Hardware to be designed. The parties contemplate
that SGl's tasks for the First Initial Emulation Unit will include the
following: (i) if interface hardware is necessary, implementation for a
small production (10 - 20 units) of interface hardware, (ii) development of
software for the First Initial Emulation Unit, (iii) the assembly and
delivery of two complete First Initial Emulation Units (including some SGI
system), one to be used by SGI and one to be used by the Company.
Second Initial Emulation Unit. The parties contemplate that the Second
-----------------------------
Initial Emulation Unit will consist of a pre-released LSI chip set with a
hardware interface to some SGI machine (e.g. Indy). The parties contemplate
that SGI's tasks for the Second Initial Emulation Unit will include the
following: (i) designing the hardware and implementation for a small
production (20 - 30 units) (iii) developing software for the Second Initial
Emulation Unit, and (iv) the assembly and delivery of twenty (20) complete
Second Initial Emulation Units (including some SGI system), five (5) to be
used by SGI and fifteen (15) to be used by the Company.
SGI DELIVERABLE FOR FIRST INITIAL EMULATION UNIT: SGI shall deliver to the
Company one First Initial Emulation Unit (hardware, software, and technical
documentation). SGI to provide software updates for the First Initial
Emulation Unit via a quick and efficient distribution method. SGI shall
make additional First Initial Emulation Units available to the Company for
purchase by the Company at SGl's cost (First Initial Emulation Units
supplied at SGI's cost not to exceed 20) (additional First Initial
Emulation Units not included in the Budget).
DESIRABLE TARGET DATE FOR SGI DELIVERABLE FOR FIRST INITIAL EMULATION UNIT:
May 31, 1994.
LATEST TARGET DATE FOR SGI DELIVERABLE FOR FIRST INITIAL EMULATION UNIT:
July 31, 1994.
SGI DELIVERABLE FOR SECOND INITIAL EMULATION UNIT: SGI shall deliver to the
Company one Second Initial Emulation Unit (hardware, software, and
technical documentation). SGI to provide software updates for the Second
Initial Emulation Unit via a quick and efficient distribution method. SGI
shall make additional Second Initial Emulation Units available to
<PAGE>
the Company for purchase by the Company (additional Second Initial
Emulation Units not included in the Budget).
DESIRABLE TARGET DATE FOR SGI DELIVERABLE FOR SECOND INITIAL EMULATION
UNIT: January 1, 1995.
LATEST TARGET DATE FOR SGI DELIVERABLE FOR SECOND INITIAL EMULATION UNIT:
March 31, 1995.
5. LICENSEE EMULATION UNIT.
-----------------------
DESCRIPTION: Company anticipates that Company will design (or have a third
party design) an "Licensee Emulation Unit," which is defined as a home box
made by using the actual LSI chip set from the Consumer Hardware, plus
extra control hardware and interface for programming and debugging
purposes. The target dates for Company's completion of the Licensee
Emulation Unit are:
DESIRABLE TARGET DATE FOR COMPLETION OF LICENSEE EMULATION UNIT: March 31,
1995.
LATEST TARGET DATE FOR COMPLETION OF LICENSEE EMULATION UNIT: April 30,
1995.
The cost associated with Company's design of the Licensee Emulation Unit is
not part of the Budget; rather, it is at Company's expense. However, SGI
agrees to provide reasonable consultation and technical advice to Company
in connection with Company's design of the Licensee Emulation Unit.
6. PROGRAMMING ENVIRONMENT(S).
--------------------------
DESCRIPTION: Company shall be responsible for the programming
environment(s) for the Initial Emulation Units and the Licensee Emulation
Unit, which environment(s) may be used by the Company and its video game
developers for programming video games. It is contemplated that the
programming environment(s) for the Initial Emulation Units and Licensee
Emulation Units will include a customized assembler, and a C compiler if
applicable, and a computer system such as Indy, PC and other possible
systems. The Company anticipates that Company, and initial video game
developers, will use SGl's Indy for the programming environment with the
Initial Emulation Units.
SGI agrees to consult with and provide technical advice to Company with
regard to the programming environment(s) for the Initial Emulation Units
and the Licensee Emulation Unit.
DESIRABLE TARGET DATE FOR COMPANY'S COMPLETION OF PROGRAMMING ENVIRONMENT
FOR INITIAL EMULATION UNIT: May 31, 1994.
LATEST TARGET DATE FOR COMPANY'S COMPLETION OF PROGRAMMING ENVIRONMENT FOR
INITIAL EMULATION UNIT: July 31, 1994.
DESIRABLE TARGET DATE FOR COMPANY'S COMPLETION OF PROGRAMMING ENVIRONMENT
FOR LICENSEE EMULATION UNIT: March 31, 1995.
<PAGE>
LATEST TARGET DATE FOR COMPANY'S COMPLETION OF PROGRAMMING ENVIRONMENT FOR
LICENSEE EMULATION UNIT: April 30, 1995.
7. VISUAL DESIGN ENVIRONMENT.
-------------------------
DESCRIPTION: Company contemplates that it will contract as quickly as
possible with a third party (currently expected to be Alias Research Inc.)
to develop and/or customize the third party's off-the-shelf software to use
as the visual design environment for the Initial Emulation Units and
Licensee Emulation Units. The Company shall make the final decision
regarding the choice of the third party. Because the software for the
visual design environment must efficiently interface with the Initial
Emulation Units designed by SGI, SGI and Company shall jointly be
responsible for defining the specification given to the third party for
development and/or modification of the software for the visual design
environment.
DESIRABLE TARGET DATE FOR DELIVERABLE OF VISUAL DESIGN ENVIRONMENT: May 31,
1994.
LATEST TARGET DATE FOR DELIVERABLE OF VISUAL DESIGN ENVIRONMENT: July 31,
1994.
PAYMENT TO THIRD PARTY: If the third party contracted with to do the visual
design environment requires payment of a fee, that expense is not part of
the Budget. Rather, it is at Company's expense.
8. AUDIO DESIGN ENVIRONMENT.
------------------------
DESCRIPTION: Company contemplates that it will contract as quickly as
possible with a third party (currently not identified) to develop and/or
customize the third party's off-the-shelf software to use as the audio
design environment for the Initial Emulation Units and Licensee Emulation
Units. The Company shall make the final decision regarding the choice of
the third party. Because the software for the audio design environment must
efficiently interface with the Initial Emulation Units designed by SGI, SGI
and Company shall jointly be responsible for defining the specification
given to the third party for development and/or modification of the
software for the audio design environment.
DESIRABLE TARGET DATE FOR DELIVERABLE OF AUDIO DESIGN ENVIRONMENT: May 31,
1994.
LATEST TARGET DATE FOR DELIVERABLE OF AUDIO DESIGN ENVIRONMENT: July 31,
1994.
PAYMENT TO THIRD PARTY: If the third party contracted with to do the audio
design environment requires payment of a fee, that expense is not part of
the Budget. Rather, it is at Company's expense.
9. GRAPHICS LIBRARY TUTORIAL AND DEMONSTRATION PACKAGE.
---------------------------------------------------
DESCRIPTION: SGI shall be responsible for supplying the Company with one or
more sample game frameworks, source code, algorithms, and commentary
illustrating the use of a library that demonstrates and explains the
creation and rendering of hyper 2D
<PAGE>
polygons, 3D polygons, and other graphics programming techniques relevant
to the Consumer Hardware. The purpose of this software is to demonstrate to
the Company and its video game developers how hyper 2D and 3D graphics can
be accomplished in video games using the LSI chip set and versions of the
visual design environment, audio design environment, and programming
environment(s). The parties contemplate an introductory package
("Introductory Package") and then a later more advanced package ("Advanced
Package") of the materials described in this paragraph. By way of example,
and not by way of limitation, the Company and its video game developers
will need to understand how to create a polygon. These packages are
intended to assist the Company and its video game developers in
understanding good programming techniques for the Consumer Hardware. The
parties will mutually agree on the release/distribution of the materials
described in this paragraph.
SGI DELIVERABLE: Program source code, supplemented by extensive written
materials described above.
DESIRABLE TARGET DATE FOR SGI DELIVERABLE FOR INTRODUCTORY PACKAGE: May 31,
1994.
LATEST TARGET DATE FOR SGI DELIVERABLE FOR INTRODUCTORY PACKAGE: June 31,
1994.
DESIRABLE TARGET DATE FOR SGI DELIVERABLE FOR ADVANCED PACKAGE: January 31,
1995.
LATEST TARGET DATE FOR SGI DELIVERABLE FOR ADVANCED PACKAGE: March 31, 1995
ATTACHMENT: SCHEDULE A1
<PAGE>
Silicon Graphics Confidential Home Box Baseline
SCHEDULE A1
HOME BOX BASELINE
The purpose of this document is to summarize discussions about the baseline
functionality of a future home game box. The baseline functionality is that of
a "hyper" traditional 2D video game. Other functionality such as true 3D
capability is not considered here.
1.DISPLAY
The display is from a full-screen memory image (bit map). The image is double
buffered. (There may be more than one display image, see Display Overlay.)
1.1.DISPLAY FORMAT
The display image size is 320 by 240 for NTSC at 60Hz (50Hz for PAL). A single
fixed pixel clock frequency is desirable, such as 6MHz. Various display formats
are supported:
320x240 non-interlaced.
320x240 non-interlaced with horizontal filtering to 640x240.
320x240 interlaced with vertical filtering to 320-480.
320x240 interlaced with horizontal and vertical filtering to 640x480.
An option may be a 640 by 480 display image. The visible line and pixel start
location and count should be supported. Filtering may be supported through line
buffers in the display hardware.
1.2. DISPLAY OUTPUT
Display output should support analog composite video, S-video, and RGB. The
integration of the video DAC and encoder on chip is desirable. Video output
enhancement filtering such as Clear Vision should be investigated.
1.3. DISPLAY COLOR
The display color is 5/5/5 RGB in a 16 bit pixel. An option may be 8/8/8 RGB.
The display color should be gamma corrected through a lookup table in the
display hardware.
1.3.1. DISPLAY INDEXED COLOR
8 bit indexed color display should be supported. Indexed color display might
use the display gamma correction lookup table or might share the graphics
drawing lookup table.
<PAGE>
1.4. DISPLAY OVERLAY
Display overlay of multiple images may be required if sprite performance is less
than optimal. There can be up to four overlay images. The HV starting position
and size of each image can vary. Wraparound of images during display is
supported. Images can be less than full screen size. The images are combined
in a fixed priority order. The combination is by pixel selection between
images, and there is no blending between images during overlay display. A line
buffer may be maintained to combine overlay images and perform line averaging.
2. UPDATE RATE
The maximum image update rate is 60Hz. Slower rates are under software control
by enabling an image buffer switch on vertical retrace. Applications which do
not complete an image in the update time can choose to skip the buffer switch,
or display the incomplete image. Read access to the current display line number
should be supported. A high-resolution counter for timing and profiling is
desirable.
3.SPRITES
3.1. SPRITE PERFORMANCE
The minimum goal is 2000 sprites per update or 120K per second. The average
sprite area is 16 by 16 pixels, or roughly 500K pixels per update, or 30M pixels
per second. More sprites are desirable, such as 2500 or 3000 per update.
Performance to draw the display image 8 or more times per update, or 640K
pixels, is desirable. Sprites can be of any programmable area, within a
performance limit of some maximum total number of sprites per update and total
number of pixels per update. Sprite image data should be aligned on a pixel
boundary (8 or 16 bit), so that no memory padding is needed.
3.2. SPRITE TRANSFORMATIONS
Sprites can be arbitrarily scaled, rotated, translated, and skewed. Perspective
projection should be an option, but may be lower performance. Sprite
transformation precision is 16 bit fixed point. Higher precision, such as
floating point, could be an option at lower performance.
3.3. SPRITE CLIPPING
Sprite geometry should be clipped to display image size. A programmable
clipping rectangle within the display image should also be supported.
3.4. SPRITE DATA
Sprites are defined by polygons and rectangular images. The polygons may
consist of quadrilaterals, triangles, meshes of quadrilaterals, or triangle
strips. Multiple polygons may be used for a single sprite image. All polygons
must be convex and planar. Both 2D and 3D polygons are supported. Sprites with
more than one image should be investigated, including mipmaps with
microtextures.
<PAGE>
3.5. SPRITE SAMPLING
Sprite pixels are point sampled. Interpolated sampling may be an option at
lower performance. The quality of various sampling methods, such as linear,
bilinear, and trilinear sampling should be investigated. The effect of noise
and/or dither on sampling should be investigated. Sprite interpolation should
include an option to filter only the pixel transparency or alpha component, so
that edges can be antialiased without blurring colors. Sprite mipmap images
should be investigated. The sprite rendering method is to interpolate sprite
pixel coordinates along the edges and spans of the transformed polygon enclosing
the sprite, and to access the sprite pixel color at those coordinates at each
pixel inside the polygon.
3.6. SPRITE SAMPLING PERSPECTIVE CORRECTION
Sprite sampling coordinates should be corrected for perspective. Approximate
methods such as piecewise linear approximation or curve approximation may be
used.
3.7. SPRITE COLOR
Sprite color can be 5/5/5/1 RGBA. The extra A bit is used for effects such as
translucency. Sprite color can also be 4/4/4/4 RGBA. Sprit color can also be 8
bit indexed color, which for a 5/5/5/ display image is converted to RGB through
a lookup table during drawing. When the display image is indexed color, only
indexed color sprites can be drawn.
3.8. SPRITE SHADING
Gouraud shading of a polygon enclosing a sprite, and the combination of sprite
pixel color with the interpolated polygon color is supported, for effects such
as lighting and haze.
3.9. SPRITE COMBINE
Sprite colors can be combined in several ways:
Blend: sprite image translucency applied to a single color (indexed color
only?).
Modulate: sprite image color multiplied by shaded color.
Decal: blend sprite image color and shaded colors by sprite image
translucency.
3.10. SPRITE PRIORITY
Sprites are drawn in back-to-front order (painter's algorithm). A per-pixel
depth comparison for sprite priority should be an option. The depth might be 8
bits per pixel. Each sprite has a single 8 bit depth value, and a depth image
equal in size to the display image is compared and updated.
3.11. SPRITE EFFECTS
A conditional write based on sprite pixel transparency is supported. Alpha
blending per sprite pixel is supported, for effects such as translucency,
shadows, and spotlights. Minimum blending functionality is (Source/2 +
Destination/2) and (Destination - Source), while general blending is a multiply
per R,G, and B component. A global alpha value can be multiplied by the sprite
pixel alpha for fade and dissolve. Indexed color display drawing might use a
palette of some number
<PAGE>
of hues, each of which has several intensity levels (such as 6 bits of hue and 2
bits of intensity), in order to support pixel blending by changing the intensity
without changing the hue, for shadows, spotlights, and translucency.
3.12. SPRITE DECOMPRESSION
Sprites (and background images) can be decompressed. One type of decompression
is when the data is loaded from ROM, and this may be lossy methods such as JPEG.
Another type of decompression is during drawing. Indexed color is a kind of
drawing decompression. Other kinds of decompression to be investigated include
run length decoding or and block truncation decoding.
4.BACKGROUND
With a single display image, there is no significant distinction between sprites
and background images, rather backgrounds are simply larger sized sprites. If
display overlay is supported, up to three background image planes and one
foreground plane are supported. The background planes can be scrolled and
panned per update, with or without wraparound.
5.AUDIO
At least 24 channels of audio are supported. Each channel is 16 bits at up to
44.1KHz. The channels are combined into two stereo output channels. Audio is
decompressed from ADPCM. Echo processing is supported on the output channels. A
random noise function is available. Audio input with an integrated ADC is
desired.
6.OTHER
Bus sizing to allow the direct connection of 8 and 16 bit I/O devices should be
supported. DMA from I/O devices such as ROM should be supported.
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
DEVELOPMENT FEE ADVANCE TOTAL TO BE PAID
ROYALTY ON
<S> <C> <C> <C>
1. XXXXXXXXX XXXXXXXXX XXXXXXXXX Already Paid
2. XXXXXXXXX XXXXXXXXX XXXXXXXXX February 8, 1994
3. XXXXXXXXX XXXXXXXXX XXXXXXXXX May 1, 1994
4. XXXXXXXXX XXXXXXXXX XXXXXXXXX August 1, 1994
5. XXXXXXXXX XXXXXXXXX XXXXXXXXX November 1, 1994
6. XXXXXXXXX XXXXXXXXX XXXXXXXXX February 1, 1995
7. XXXXXXXXX XXXXXXXXX XXXXXXXXX May 1, 1995
----- ----- -----
TOTAL:XXXXXXXXX XXXXXXXXX XXXXXXXXX
</TABLE>
*NCL will make XXXXXXXXX withholding on the advance royalty, so only
XXXXXXXXX will be received by SGI.
[XXXXXX]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
EXHIBIT 10.7.3
SECOND ADDENDUM TO
JOINT DEVELOPMENT AND LICENSE AGREEMENT
THIS SECOND ADDENDUM TO JOINT DEVELOPMENT AND LICENSE AGREEMENT is made as of
the _____ day of February, 1996 (the "Effective Date"), among Nintendo Co., Ltd.
("NCL"), Nintendo of America Inc. ("NOA") (NCL and NOA are referred to
collectively as "Company"), Silicon Graphics, Inc., and MIPS Technologies, Inc.
(collectively referred to as "SGI").
BACKGROUND
Company and SGI are parties to a "Joint Development and License Agreement",
dated August 20, 1993, as supplemented by the "First Addendum to Joint
Development and License Agreement", dated February 5, 1994 (collectively, the
"Agreement"). Company and SGI have agreed to enter into this Second Addendum as
it relates to the joint ownership of certain patent rights, as described herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions.
-----------
(a) Unless otherwise defined in this Second Addendum, all capitalized words
used in this Second Addendum shall have the meanings set forth in the Agreement.
(b) Section 1.8. "COMPANY PRODUCTS" is hereby revised to add the phrase
"and/or Foreground Technology" immediately after the term "Developed
Technology."
(c) Section 1.16, "FILING" is hereby revised to add the phrase "or
Foreground Technology" immediately after the term "Developed Technology."
(d) The last sentence of Section 1.23, "TECHNOLOGY", is hereby revised to
read as follows:
Technology is either Background Technology, Developed Technology or
Foreground Technology.
(e) A new Section 1.26 is hereby added to the Agreement as follows:
1.26 "FOREGROUND TECHNOLOGY" means those inventions listed in
Schedule C, excluding Invention 2, that are covered by a claim of a
Patent(s) that issues directed to the application of elements of the
Background Technology to Company Products (but the claim coverage may be
broader than Company Products), which Patent(s) are based on Filings that
the parties mutually agree on in writing. The parties acknowledge that the
inclusion of Background Technology, Developed Technology or Company
Technology in a Foreground Technology Patent claim or disclosure shall not
be interpreted as converting such Background Technology, Developed
Technology or Company Technology into Foreground Technology.
<PAGE>
(f) A new Section 1.27 is hereby added to the Agreement as follows:
1.27 "COPROCESSOR COMMAND SET" means (a) the binary instruction
formats for controlling or commanding the signal processor portion of
the Coprocessor; and (b) the binary command formats for controlling or
commanding the display processor portion of the Coprocessor.
(g) A new Section 1.28 is hereby added to the Agreement as follows:
1.28 "MICROCODE/LIBRARIES" means the computer programs developed
and delivered by SGI to Company pursuant to this Agreement, which
program(s) are to be incorporated into each copy of the Packaged
Software and executed by the Coprocessor, and run-time modules of the
graphics libraries and audio libraries and the real-time operating
system developed and delivered by SGI to Company under this Agreement.
(h) A new Section 1.29 is hereby added to the Agreement as follows:
1.29 "PATENT" means letters patent issued under laws of the
United States, reissue patents, divisional patents, reexamination
patents, continuations, continuations-in-part and the foreign
counterparts of any of the foregoing.
(i) A new Section 1.30 is hereby added to the Agreement as follows:
1.30 "CROSS LICENSE" means an agreement between either party to
this Agreement and a third party, other than a Licensee, effective
prior to the Effective Date of this Second Addendum. pursuant to which
such party and the third party grant each other licenses to patents
developed or acquired during the term of such agreement, which licenses
are granted in settlement of infringement claims.
(j) A new Section 1.31 is hereby added to the Agreement as follows:
1.31 "COPROCESSOR MICROINSTRUCTION SET" means the binary
instruction formats executable by the signal processor portion of the
Coprocessor. Binary versions of the Microcode/Libraries are encoded
using the Coprocessor Microinstruction Set.
(k) A new Section 1.32 is hereby added to the Agreement as follows:
1.32 "COPROCESSOR" means the Application Specific Integrated
Circuit developed by SGI pursuant to Schedule A for incorporation in
the Consumer Hardware.
<PAGE>
(l) A new Section 1.33 is hereby added to the Agreement as follows:
1.33 "DEVELOPER'S MANUAL" shall mean all versions of the
Nintendo 64 Developer's Manual, covering the topics listed in Schedule
D, developed and delivered by SGI to Company pursuant to this
Agreement.
(m) A new Section 1.34 is hereby added to the Agreement as follows:
1.34 "DEVELOPMENT ENVIRONMENT" shall mean all versions of the
software listed in Schedule D, developed and delivered by SGI to
Company pursuant to this Agreement for use by Packaged Software
developers.
(n) A new Section 1.35 is hereby added to the Agreement as follows:
1.35 "MASK WORK" means the layout of the Coprocessor.
2. A new Schedule C, as attached to this Second Addendum, is hereby added to
the Agreement.
3. A new Schedule D, as attached to this Second Addendum, is hereby added to
the Agreement.
4. The following is hereby added to the end of Section 6.2 of the Agreement:
SGI and Company shall use reasonable efforts to pursue and to prosecute
Filings applicable to the invention identified as "Invention 2" in Schedule
C, which the parties acknowledge is directed primarily to the protection of
Developed Technology. As provided in this Section 6.2, Company shall have
the administrative responsibility for such Filings.
5. Confidentiality. New Sections 8.9, 8.10 and 8.11, which the parties agree
---------------
shall be effective as of the effective date of the Agreement, are hereby added
to the Agreement as follows:
8.9 CONFIDENTIALITY OF COMPANY TECHNOLOGY. SGI acknowledges
Company's representation that the Company Technology constitutes the
valuable proprietary and confidential information of Company, and
agrees to (i) retain in confidence the Company Technology, (ii)
restrict the use of and access to the Company Technology to its
employees to whom disclosure is necessary in connection with this
Agreement, and to authorized subcontractors, (iii) appropriately bind
each employee to whom any such disclosure is made to hold the Company
Technology in confidence, and (iv) not to sell, lease, transfer or
otherwise disclose the Company Technology to any third party except as
<PAGE>
permitted by this Agreement, provided, however, that SGI may disclose
the Company Technology to its agents and consultants; if necessary or
appropriate in furtherance of SGI's development work under this
Agreement, under the terms and conditions of a signed, written
confidential disclosure agreement with terms and conditions which
prohibit disclosure to other parties, and which are otherwise at least
as restrictive as the terms of subsections (i)-(iii) of this Section
8.9. Without limiting the foregoing, SGI agrees that it will treat the
Company Technology with at least the same degree of care as it would
its own highly proprietary information.
8.10 CONFIDENTIALITY OF FOREGROUND TECHNOLOGY. SGI and Company
acknowledge that the Foreground Technology constitutes their valuable
and proprietary information. Except to the extent that any Foreground
Technology is described in any Patent, and except as otherwise agreed
in writing by the parties, each of SGI and Company agrees to (i)
retain in confidence the Foreground Technology, (ii) restrict the use
of and access to the Foreground Technology to its employees to whom
disclosure is necessary or permitted in connection with the exercise
of their rights in the Foreground Technology as provided in this
Agreement, and to authorized licensees and subcontractors, (iii)
appropriately bind each employee to whom any such disclosure is made
to hold the Foreground Technology in confidence, and (iv) not sell,
lease, transfer or otherwise disclose the Foreground Technology to any
third party except to licensees permitted by this Agreement and to its
agents or consultants under the terms and conditions of a signed,
written confidential disclosure agreement with terms and conditions
which prohibit disclosure to other parties, and which are otherwise at
least as restrictive as the terms of subsections (i)-(iii) of this
Section 8.10. Without limiting the foregoing, SGI agrees that it will
treat the Foreground Technology with at least the same degree of care
as it would its own highly proprietary information.
8.11 CONFIDENTIALITY OF DEVELOPED TECHNOLOGY. SGI and Company
acknowledge that the Developed Technology constitutes their valuable
and proprietary information. Except to the extent that any Developed
Technology is described in any Patent, and except as otherwise agreed
in writing by the parties, each of SGI and Company agrees to (i)
retain in confidence the Developed Technology, (ii) restrict the use
of and access to the Developed Technology to its employees to whom
disclosure is necessary or permitted in connection with the exercise
of their rights in the Developed Technology as provided in this
Agreement, and to authorized licensees and subcontractors, (iii)
appropriately bind each employee to whom any such disclosure is made
to hold the Developed Technology in confidence, and (iv) not sell,
lease, transfer or otherwise disclose the Developed Technology to any
third party except to licensees permitted by this Agreement and to its
agents or consultants under the terms and conditions of a
<PAGE>
signed, written confidential disclosure agreement with terms and
conditions which prohibit disclosure to other parties, and which are
otherwise at least as restrictive as the terms of subsections (i)-
(iii) of this Section 8.11. Without limiting the foregoing, SGI agrees
that it will treat the Developed Technology with at least the same
degree of care as it would its own highly proprietary information.
6. The following is hereby added to the end of Section 9.3(b) of the
Agreement:
As of the effective date of this Second Addendum, SGI represents and
warrants to Company that, to the best of SGI's actual knowledge, SGI
has provided Company with a copy of (i) all patent applications filed
by SGI whose claims would be infringed by the unauthorized
manufacture, use or sale of the Consumer Hardware and/or the Packaged
Software incorporating those components of the Consumer Hardware
and/or the Packaged Software developed by SGI pursuant to this
Agreement; and (ii) all patent applications currently being prepared
by SGI whose claims, as currently drafted, would be infringed by the
unauthorized manufacture, use or sale of Consumer Hardware and/or the
Packaged Software incorporating those components of the Consumer
Hardware and/or the Packaged Software developed by SGI pursuant to
this Agreement. If, subsequent to the effective date of this Second
Addendum, SGI learns of any such patent application or if any such
claim is added to any such application, SGI shall promptly notify
Company.
7. Intellectual Property Indemnity. Sections 9.5 and 9.6 of the Agreement are
-------------------------------
hereby deleted in their entirety and replaced with the following:
9.5 SGI INTELLECTUAL PROPERTY INDEMNIFICATION. SGI will defend,
indemnify, and hold harmless Company and its Affiliates, directors,
officers, employees and agents against any claim, suit or proceeding
alleging that the Background Technology or SGI's contributions to the
Foreground Technology or the Developed Technology or use thereof
infringes or misappropriates any U.S. or Japanese copyright, mask
work, trade secret, patent or other intellectual property, proprietary
or contract rights of any third party and against any damages or
liability resulting from such claim, suit or proceeding, including,
without limitation, reasonable attorneys' fees and other costs and
expenses, provided that (i) Company gives SGI notice of the claim,
suit or proceeding promptly after commencement thereof (or, if later,
promptly after Company learns that such claim, suit or proceeding
relates to the Background Technology or SGI's contribution to the
Foreground Technology or the Developed Technology), (ii) SGI may not
settle any claim, suit or proceeding without the prior, written
consent of Company which consent shall not be unreasonably withheld,
provided that if Company refuses to consent to settlement acceptable
to the plaintiff(s) and proposed by SGI to Company, SGI's total
liability under this Section 9.5 shall be limited to the amount of the
proposed settlement and attorney's fees incurred as of
<PAGE>
the date of SGI's request for Company's consent, and (iii) Company
provides SGI with all reasonable assistance requested by SGI in
connection with the defense and/or resolution of any such claim, suit
or proceeding, at SGI's expense. Notwithstanding the defense
obligation of SGI under this Section 9.5, Company shall have the
right, at its own expense, to appoint its own counsel to participate
in any claim, suit or proceeding, and SGI shall cooperate with Company
and such counsel. If there is a final determination of infringement or
misappropriation, SGI shall, at its option, use reasonable efforts to,
(i) replace or modify any component of the Background Technology or
SGI's contribution to the Foreground Technology or the Developed
Technology with a functionally equivalent noninfringing component that
conforms to the requirements of this Agreement, or (ii) obtain a
license for Company to use such Background Technology or SGI's
contribution to the Foreground Technology or the Developed Technology.
Notwithstanding the foregoing, SGI shall have no liability for a
claim, suit or proceeding to the extent based on (a) modification of
the Background Technology or SGI's contribution lo the Foreground
Technology or the Developed Technology by or for Company (other than
by SGI), or (b) Company's use of the Background Technology or SGI's
contribution to the Foreground Technology or the Developed Technology
with Accessories not supplied by SGI, or (c) Company's use of a
version of the Background Technology or SGI's contribution to the
Foreground Technology or the Developed Technology that was not at the
time of use the most recent version provided by SGI to Company. For
purposes of this Section 9.5, SGI's contributions to the Foreground
Technology or the Developed Technology shall include any technology
developed by SGI subcontractors. SGI'S LIABILITY UNDER THIS SECTION
9.5 SHALL IN NO EVENT EXCEED THE DEVELOPMENT FEES AND ROYALTIES PAID
BY COMPANY TO SGI UNDER THIS AGREEMENT.
9.6 COMPANY INTELLECTUAL PROPERTY INDEMNIFICATION. Company will
defend, indemnify, and hold harmless SGI and its Affiliates,
directors, officers, employees and agents against any claim, suit or
proceeding alleging that the Company contributions to the Foreground
Technology or the Developed Technology or use thereof infringes or
misappropriates any U.S. or Japanese copyright, mask work, trade
secret, patent or other intellectual property, proprietary or contract
rights of any third party and against any damages or liability
resulting from such claim, suit or proceeding, including, without
limitation, reasonable attorneys' fees and other costs and expenses,
provided that (i) SGI gives Company notice of the claim, suit or
proceeding promptly after commencement thereof (or, if later, promptly
after SGI learns that such claim, suit or proceeding relates to the
Company contributions to the Foreground Technology or the Developed
Technology), (ii) SGI gives Company sole authority to defend and/or
resolve any such claim, suit or proceeding or the portion thereof
relating to the Company contributions to the Foreground Technology or
the Developed
<PAGE>
Technology, and (iii) SGI provides Company with all reasonable
assistance requested by Company in connection with the defense and/or
resolution of any such claim, suit or proceeding, at Company's
expense. Notwithstanding the defense obligation of Company under this
Section 9.6, SGI shall have the right, at its own expense, to appoint
its own counsel to participate in any claim, suit or proceeding, and
Company shall cooperate with SGI and such counsel. Notwithstanding the
foregoing, Company shall have no liability for a claim, suit or
proceeding to the extent based on (a) modification of the Company
contributions to the Foreground Technology or the Developed Technology
or (b) SGI's use of the Company contributions to the Foreground
Technology or the Developed Technology with equipment or components
not supplied by Company. For purposes of this Section 9.6, Company's
contributions to the Foreground Technology or the Developed Technology
shall include any technology developed by Company subcontractors.
COMPANY'S LIABILITY UNDER THIS SECTION 9.6 SHALL IN NO EVENT EXCEED
THE DEVELOPMENT FEES AND ROYALTIES PAID BY COMPANY TO SGI UNDER THIS
AGREEMENT.
8. Rights in Foreground Technology. A new Article 14.0 is hereby added to the
-------------------------------
Agreement as follows:
14.0 RIGHTS IN FOREGROUND TECHNOLOGY.
14.1 JOINT OWNERSHIP. Subject to the terms and conditions of
this Agreement, SGI and Company shall jointly own, in equal, undivided
shares (and each party hereby assigns to the other an equal, undivided
interest in) all right, title and interest in the Foreground
Technology (whether developed in whole or in part by SGI or by
Company), and title to all patents issued thereon shall be joint.
14.2 SGI RIGHTS IN FOREGROUND TECHNOLOGY. Subject to the
provisions of Section 6.4(a), which shall apply to the Foreground
Technology as well as the Background Technology, SGI shall have the
unrestricted right to use the Foreground Technology and to license any
third party to use the Foreground Technology without the consent of
Company, and without any duty to account to or to share proceeds with
Company, on account of such use or licensing of the Foreground
Technology. SGI's rights in the Foreground Technology shall survive
the expiration or termination of this Agreement and shall continue
until the expiration of the last Patent to expire that would be
infringed by the manufacture, use or sale of any Foreground
Technology.
14.3 COMPANY RIGHTS IN FOREGROUND TECHNOLOGY. Notwithstanding
Company's joint ownership rights in the Foreground Technology, Company
agrees that Company shall only have (a) the worldwide, nontransferable
(except to
<PAGE>
Company's authorized subcontractors) right to use the Foreground
Technology only in combination with the Licensed Background Technology
and the Developed Technology for purposes of the design, manufacture,
use, sale and/or distribution of Company Products, and (b) the
worldwide right to grant nonexclusive licenses to Licensees to use the
Foreground Technology, only in combination with the Licensed
Background Technology and the Developed Technology, for purposes of
the design, manufacture, use, sale and/or distribution of Packaged
Software, Accessories, Coin Operated Software and/or Coin Operated
Hardware. All such licenses shall be in writing and shall be pursuant
to a form of agreement incorporating license grant and proprietary
rights provisions approved in writing by SGI, which approval shall not
be unreasonably withheld. Company shall have no obligation to obtain
the consent of SGI, or to account to or to share proceeds with SGI, on
account of such licensing or use of the Foreground Technology as
permitted in this Section 14.3. Company's rights in the Foreground
Technology shall commence as of the effective date of this Second
Addendum and shall survive the expiration of the term of this
Agreement and shall continue until the expiration of the last Patent
to expire that would be infringed by the unauthorized manufacture, use
or sale of any Foreground Technology. If the parties succeed in
obtaining Patents, which they would jointly own, and which would be
infringed by the manufacture, use or sale of any Foreground
Technology, SGI will not assert a claim against Company or a Licensee
for infringement of any such Patent on account of Company's or a
Licensee's manufacture, use or sale of such Foreground Technology in
products other than Company Products; provided, however, that SGI
reserves the right to assert a claim against Company for breach of
this Agreement if Company manufactures, uses, sells or licenses any
products other than Company Products which use Foreground Technology.
14.4 COOPERATION OF THE PARTIES IN FILINGS. The parties shall
use reasonable efforts to pursue and prosecute Filings applicable to
the Foreground Technology. All Filings applicable to the Foreground
Technology will be made at a time when appropriate during the
development or after completion of the Foreground Technology under the
names of both parties as joint owners. Company shall have the primary
administrative responsibility for Filings with respect to the
Foreground Technology, and the parties will cooperate with respect to
Filings on the Foreground Technology (including with respect to claim
amendments). Silicon Graphics will bear all fees and out-of-pocket
expenses payable to Sterne, Kessler, Goldstein and Fox in connection
therewith, and Company shall bear all other filing fees, attorneys'
fees and out-of-pocket expenses incurred in connection therewith. As
used herein, "administrative responsibility" means the preparation of
any documents required for a Filing, and the submission thereof to the
appropriate governmental entity. If SGI has not yet received a
proposed Filing from Company on an item of Foreground Technology,
<PAGE>
and SGI believes that a Filing should be made with respect thereto,
SGI may submit a written request to Company that Company proceed with
the preparation of such Filing, provided, however, that Company may,
in its sole discretion, proceed or decline to proceed with the
preparation of such Filing. If Company declines to prepare and submit
a Filing on an item of Foreground Technology, SGI may proceed with the
preparation and submission of such Filing at SGI's expense. In either
case. a party preparing a Filing shall submit such Filing to the other
party for its review and approval prior to any submission to any
governmental entity. A Filing shall be deemed accepted by the
receiving party if the receiving party does not provide written notice
of rejection to the submitting party within thirty (30) (or such
shorter period as the parties may agree upon) days after the
submitting party's notice thereof. If a party rejects a Filing, it
shall include with its rejection notice a detailed description of its
reason(s) for rejection, and shall make specific suggestions as to any
modifications which it believes should be made to the form or content
of such Filing prior to submission. If the submitting party believes
that the modifications suggested by the receiving party are
inappropriate, the submitting party's Coordinator shall contact the
receiving party's Coordinator, and the Coordinators shall arrange and
hold a meeting or discussion between appropriate representatives of
the parties, at a mutually acceptable time and place, to determine a
mutually acceptable form, content and time for the proposed Filing.
Each party shall provide the other with copies of any correspondence,
materials or communications submitted to or received from a
governmental entity or a third party relating to any Filing. SGI will
provide such information regarding the Background Technology,
Foreground Technology and Developed Technology as Company may
reasonably request for purposes of permitting Company and its advisors
to evaluate actual or potential infringement claims directed at
Company Products. Nothing in this Section 14.4 shall be interpreted to
expand SGI's obligations under Section 9.5.
14.5 ENFORCEMENT OF RIGHTS IN FOREGROUND TECHNOLOGY. Before
initiating any action against an alleged infringer of any rights in
the Foreground Technology, each party (the "Enforcing Party") shall
contact the other party to confirm that the alleged infringer has not
been granted a license to use the Foreground Technology by the other
party or has not purchased from the other party products whose use
would entitle the alleged infringer to use the Foreground Technology.
If the alleged infringer has not obtained such a license or purchased
such products, the Enforcing Party shall have the right, without
further consent of the other party, to take such steps as it chooses,
in its sole discretion, to enforce its rights as joint owner of the
Foreground Technology, and the other party shall provide such
reasonable assistance as the Enforcing Party may request in connection
therewith, provided either that such assistance does not require any
out-of-pocket expenditures by the other party or that the Enforcing
Party agrees to reimburse any such out-of-pocket expenses incurred by
the other party. The
<PAGE>
Enforcing Party shall be entitled to retain all amounts recovered from
the alleged infringer in connection with the litigation and/or
settlement of any such action. The Enforcing Party shall defend,
indemnify and hold harmless the other party and its Affiliates from
and against any claim, suit or proceeding initiated against the other
party by any alleged infringer in connection with or in response to
actions initiated against the alleged infringer by the Enforcing
Party, provided that (i) the other party gives the Enforcing Party
notice of the claim, suit or proceeding promptly after commencement
thereof, (ii) the other party gives the Enforcing Party sole authority
to defend and/or resolve any such claim, suit or proceeding, and (iii)
the other party gives the Enforcing Party all reasonable assistance
requested by the Enforcing Party in connection with the defense and/or
settlement of the claim, suit or proceeding, at the Enforcing Party's
expense.
14.6 MICROCODE/LIBRARIES, COPROCESSOR COMMAND SET, COPROCESSOR
MICROINSTRUCTION SET, AND MASK WORK. SGI will deliver to Company the
Microcode/Libraries, in source code and object code forms, the
Microcode/Libraries development environment, and documentation of the
Coprocessor Command Set and the Coprocessor Microinstruction Set, at a
time to be mutually agreed upon in writing by SGI and Company. SGI and
Company acknowledge and agree that (a) the Developed Technology is
implemented in part in each of the Microcode/Libraries, the
Coprocessor Command Set, the Coprocessor Microinstruction Set, and the
Mask Work; (b) subject to SGI's rights in the Licensed Background
Technology embodied in each of them, Company shall own any and all
copyrights in the Microcode/Libraries, the Coprocessor Command Set,
the Coprocessor Microinstruction Set, the Developer's Manual and the
Development Environment; (c) subject to SGI's rights in the Licensed
Background Technology embodied in the Coprocessor, SGI and Company
shall jointly own the mask work rights in the Mask Work; and (d) all
Developed Technology incorporated in the Microcode/Libraries,
Coprocessor Command Set, Coprocessor Microinstruction Set, and the
Mask Work shall be subject to the provisions of Sections 6.4 and 6.5
applicable to the Developed Technology. Company hereby grants to SGI a
paid-up, nonexclusive, irrevocable, worldwide license to duplicate,
distribute, modify, enhance, sublicense and otherwise use or exploit
the Microcode/Libraries, the Coprocessor Command Set, the Coprocessor
Microinstruction Set and the Development Environment, subject only to
the provisions of Sections 6.4, 6.5, 14.8 and 14.9.
14.7 FOREGROUND TECHNOLOGY CROSS LICENSES. Notwithstanding the
parties' joint ownership of the Foreground Technology, neither party
shall have the right to license the Foreground Technology to a third
party pursuant to a Cross License unless it obtains the prior, written
agreement of the other party to this Agreement.
<PAGE>
14.8 LIMITATIONS ON SGI'S USE OF DEVELOPED TECHNOLOGY. In
addition to the provisions of Sections 6.4 and 6.5, SGI agrees during
the term of this Agreement that SGI shall not manufacture, have
manufactured, use, license or sell the Coprocessor except to the
extent permitted by Section 6.5.
14.9 NO COMPATIBLE PROGRAM, DEVICE OR THING. During the term of
this Agreement, except as otherwise permitted by Company or as
permitted by Section 6.5(b) (which is intended to allow SGI hardware
and software to be used for Packaged Software development by Packaged
Software developers authorized by Company):
(a) SGI will not license any third party to use, distribute or
publish and will not itself use, distribute or publish any version of
the Microcode/Libraries or other computer program, device or thing
that, in unmodified form, (i) would enable video game software or non-
video game software authorized by Company to be used with devices
other than Company Products, or (ii) would enable video game software
or non-video game software which has not been authorized by Company to
be used with Company Products;
(b) SGI will not disclose, use or license any third party to use,
the binary format of the Coprocessor controller registers or the
binary addresses associated with the Coprocessor controller registers;
and
(c) SGI will not disclose or use, or license any third party to
use, the binary command formats for controlling or commanding the
display processor portion of the Coprocessor.
14.10 SOFTWARE DEVELOPMENT BY COMPANY AND LICENSEES. As an
owner of the copyrights in the Microcode/Libraries and the Coprocessor
Microinstruction Set, the Developer's Manual and the Development
Environment Company shall have the right to develop, reproduce and
distribute derivative works thereof, and to grant Licensees the right
to develop, reproduce and distribute derivative works thereof. SGI
makes no claim of rights in any portions of such derivative work(s)
developed by Company and/or any Licensee.
9. Warranty Exclusion. Section 9.2. "Warranty Exclusion"s shall be amended to
------------------
insert the phrase "or Foreground Technology" immediately following the phrase
"Developed Technology", wherever it appears in such section.
10. Limitation of Liability. Article 10.0 is hereby revised to read as follows:
-----------------------
10.0 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
<PAGE>
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OF ANY KIND (INCLUDING
WITHOUT LIMITATION LOSS OF PROFIT OR DATA) WHETHER OR NOT ADVISED OF
THE POSSIBILITY OF SUCH LOSS, HOWEVER CAUSED, WHETHER FOR BREACH OR
REPUDIATION OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, INABILITY TO
USE THE BACKGROUND TECHNOLOGY, THE FOREGROUND TECHNOLOGY, OR
OTHERWISE. IN NO EVENT SHALL THE AGGREGATE LIABILITY OF EITHER PARTY
TO THE OTHER EXCEED THE TOTAL AMOUNT PAYABLE BY COMPANY TO SGI UNDER
THIS AGREEMENT. THE ESSENTIAL PURPOSE OF THIS PROVISION IS TO LIMIT
THE POTENTIAL LIABILITY OF THE PARTIES ARISING OUT OF THIS AGREEMENT.
11. Survival of Obligations. Section 11.4 is hereby revised to add the
-----------------------
provisions of Article 14.0 to the list of provisions setting forth rights and
obligations of the parties that survive termination of the Agreement.
12. Effect of Addendum. Except as amended and supplemented by this Second
------------------
Addendum, the Agreement remains in effect pursuant to its terms, and is hereby
ratified and confirmed.
IN WITNESS WHEREOF, the parties have executed this Second Addendum as of the
date first written above.
NINTENDO CO., LTD. NINTENDO OF AMERICA INC.
By: /s/ [not legible] By: /s/ John [not legible]
------------------------------- ----------------------------
Title: Senior Managing Director Title: Executive Vice President
--------------------------- -------------------------
SILICON GRAPHICS, INC. MIPS TECHNOLOGIES, INC.
By: /s/ Thomas Jermoluk By: /s/ John Bourgoin
------------------------------- ----------------------------
Title: President & Chief Title: President
--------------------------- -------------------------
Operating Officer
---------------------------
<PAGE>
SCHEDULE C
Invention l XXXXXX
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Invention 2 XXXXXX
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Invention 3 XXXXXX
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Invention 4 XXXXXX
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Invention 5 XXXXXX
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Invention 6 XXXXXX
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<PAGE>
SCHEDULE D
Developer's Manual covers the following topics:
. Release Notes for this version of the software.
. Hardware & Software Installation and Troubleshooting.
. System Overview -
Overview of the Hardware Architecture, Run-time Software Architecture, and
Compilation.
. Operating System Overview -
Discussion of the organization of the N 64 Operating System and how to use
it. Includes Threads, Scheduling, Pre-emption, Input/Output Subsystem
Control (Video Interface, Audio Interface, Parallel Interface, and
Controller Interface), and Memory Management.
. Graphics, Reality Signal Processor (RSP) Operation -
How to use Display Lists and Display List Hierarchies, Segments, Managing
the cache, Using matrices, Vertex State, Lighting, Materials, Textures,
Fog, Clipping and Culling.
. Graphics, Reality Display Processor (RDP) Operation - RDP Pipeline
Description, RDP State, Scissoring, Detailed descriptions of each part of
the RDP Pipeline --these include the Rasterizer (RS), Texture Engine
(TX), Texture Filter (TF), Color Combiner (CC), Blender (BL), and Memory
Interface (MI), Use of Texture Mapping, including the interface, Texture
Memory (TMEM), Texture attributes, pipeline, Level-of-Detail (LOD), MIP-
mapping, and special effects. Also, a discussion of the Sprite library,
including the interface, Sprite structures. Sprite attributes. and
tricks.
. The Audio Library -
Overview of the Audio system, including low-level discussion of the Sound
Player, Sequence Player, and Synthesis Driver. Includes descriptions of the
interface for each, as well as how to use special effects such as vibrato,
and how to write a custom Audio Driver which interfaces with the Synthesis
Driver.
. Audio Tools -
How to use the instrument Compiler (ic) for creating sound banks, the ADPCM
tools to create individual sounds and effects, and the MIDI tools to create
and modify MIDI song files.
. Audio File Format - Details of the audio file format structures.
. Using Audio Tools - Performance Tips and Hints, and various examples.
. Scheduling Audio and Graphics Tasks -
Discusses the use of the scheduler (optional), how to create command lists
and manage the proportions of CPU time which the audio tasks and graphics
task receive. Describes the scheduler interface and hints for utilizing it
most effectively.
. Development Tools, Debugger -
Details about the use of the debugger, as well as how it interfaces with
the host workstation to provide feedback to the developer.
. Performance Tuning -
Hints and tips on getting the most performance out of the N 64. Sections
include Geometry Tuning, Raster Tuning, CPU Tuning, and Data Reduction.
Development Environment consists of:
. Game Shop: the debugger for runtime debugging on the N 64.
. dmedia_eoe: contains the midi kernel device driver that enables an SGI
System with IRIX 5.3 installed to interface with a MIDI device;
this is necessary to support N 64 audio development tools.
. Ultra: contains the runtime operating system/audio/graphics libraries
for Packaged Software development. Also contains tools to build
ROM images and sample programs.
<PAGE>
EXHIBIT 10.7.4
FOURTH ADDENDUM TO
JOINT DEVELOPMENT AND LICENSE AGREEMENT
Nintendo Co., Lt. ("NCL"), Nintendo of America Inc. ("NOA") (NCL and NOA
are referred to collectively as "Company"); and Silicon Graphics, Inc. and MIPS
Technologies, Inc. (Collectively referred to as "SGI"), have agreed to enter
into this Fourth Addendum to Joint Development and License Agreement, which
modified the "Joint Development and License Agreement" dated August 20, 1993, as
supplemented by the "First Addendum to Joint Development and License Agreement"
dated February 5, 1994; the "Second Addendum to Joint Development and License
Agreement" dated February 21, 1996; and the "Third Addendum to Joint Development
and License Agreement" dated June 12, 1996 (collectively, the "Agreement").
1. Section 14.6 of the Agreement is modified as it relates to ownership
of certain rights in the Mask Work by adding underlined words and deleting
certain stricken-out words as indicated below:
14.6 Microcode/Libraries, Coprocessor Command Set, Coprocessor
Microinstruction Set and Mask Work, SGI will deliver to Company the
Microcode/Libraries, in source code and object code forms, the
Microcode/Libraries development environment, and documentation of the
Coprocessor Command Set and the Coprocessor Microinstruction Set, at a time to
be mutually agreed upon in writing by SGI and Company. SGI and Company
acknowledge and agree that (a) the Developed Technology is implemented in part
in each of the Microcode/Libraries, the Coprocessor Command Set, the Coprocessor
Microinstruction Set, and the Mask Work; (b) subject to SGI's rights in the
Licensed Background Technology embodied in the ----- of them, Company shall own
any and all copyrights in the Microcode/Libraries, the Coprocessor Command Set,
the Coprocessor Microinstruction Set, the developer's Manual and the Development
Environment; (c) subject to SGI's rights in the Licensed Background Technology
embodied in the Processor, Nitendo Co., Ltd. Shall solely own the mask work
rights in the Mask Work; and (d) all Development Technology incorporated in the
Microcode/Libraries, Coprocessor Command Set, Coprocessor Microconstruction set,
and the Mask Work shall be subject to the provisions of Section 6.4 and 6.5
applicable to the Developed Technology. Company hereby grants to SGI a paid-up,
nonexclusive, irrevocable, worldwide license to duplicate, distribute, modify,
enhance, sublicense and otherwise use or exploit the Microcode/Libraries, the
Coprocessor Command Set, the Coprocessor Microinstruction Set, the Mask Work and
-------------
the Development Environment; subject only to the provisions of Sections 6.4,
6.5, 14.8 and 14.9.
2. Company and SGI further agree that this Fourth Addendum is effective
retroactively as of February 21, 1996 (the "Effective Date").
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Fourth Addendum as of
June _________, 1998.
NINTENDO CO., LTD. NINTENDO OF AMERICA, INC.
By ____________________ By ______________________
Title _________________ Title ___________________
SILICON GRAPHICS, INC. MIPS TECHNOLOGIES INC.
By ____________________ By ______________________
Title _________________ Title ___________________
