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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended February 28, 1998
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number 0-16986
ACCLAIM ENTERTAINMENT, INC.
--------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 38-2698904
- -------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
ONE ACCLAIM PLAZA, GLEN COVE, NEW YORK 11542
--------------------------------------------
(Address of Principal Executive Offices)
(516) 656-5000
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- -----
As of April 3, 1998, approximately 50,525,000 shares of Common Stock of the
Registrant were issued and outstanding.
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The registrant hereby amends Item 6, Exhibits and Reports on Form 8-K of its
Quarterly Report on Form 10-Q for the quarterly period ended February 28, 1998,
as set forth below:
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
1. Confidential License Agreement, effective as of February 20, 1997,
between Nintendo of America, Acclaim Entertainment, Inc. and Acclaim
Entertainment Ltd.+
+ Confidential treatment has been requested for certain portions of this
exhibit, which have been omitted herefrom and have been separately
filed with the Securities and Exchange Commission.
(b) Reports on Form 8-K
None.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on the 25th day of August, 1998.
ACCLAIM ENTERTAINMENT, INC.
By /s/ Gregory E. Fischbach
-----------------------------------------
Gregory E. Fischbach
Co-Chairman of the Board;
Chief Executive Officer;
President; Director
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY AN ASTERISK (*) IN
SCHEDULE 1. THE OMITTED INFORMATION HAS BEEN
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
CONFIDENTIAL LICENSE AGREEMENT
FOR NINTENDO 64 VIDEO GAME SYSTEM
(Western Hemisphere)
THIS AGREEMENT is entered into between NINTENDO OF AMERICA INC., a
Washington corporation with an address for notice purposes of 4820 150th Avenue
N.E., Redmond, WA 98052 (Fax: 206-882-3585) ("NINTENDO") and ACCLAIM
ENTERTAINMENT, INC., a New York corporation with an address for notice purposes
of 71 Audrey Avenue, Oyster Bay, NY 11771 (Fax: 516-624-2885), Attention:
President ("LICENSEE").
NINTENDO and LICENSEE acknowledge and agree as follows:
1. RECITALS
1.1 NINTENDO markets and sells a high-quality video game system,
including hardware, software and an input controller, marketed by NINTENDO under
its trademarks "Nintendo 64(TM)" and "N64(TM)", for playing video games.
1.2 LICENSEE desires to gain access to and rights to utilize highly
proprietary programming specifications, development tools, trademarks and other
valuable intellectual property rights in order to develop video game software
and to purchase and sell such video game software from NINTENDO for play on the
Nintendo 64 system, which system was developed by NCL and Silicon Graphics, Inc.
1.3 NINTENDO is willing to grant a license to utilize such proprietary
information and intellectual property rights and to sell video game software to
LICENSEE upon the terms and conditions set forth in this Agreement.
2. DEFINITIONS
2.1 "Artwork" shall mean the final art and mechanical formats for the
Licensed Product including the Game Cartridge box, user instruction manual with
consumer precautions and warranty, Game Cartridge label and inserts.
2.2 "Competing Systems" shall mean hardware platforms, whether marketed
now or in the future, designed to play interactive video games, including, but
without limitation: Apple/Bandai Pippin or Atmark, Atari Jaguar, Atari Lynx, 3DO
Real, Matsushita M2, Phillips CD-I Interactive Player, Sega Master System, Sega
Genesis, Sega CD, Sega Game Gear, Sega CD/X, Sega Nomad, Sega 32X, Sega Saturn,
Sega Pico, Sony PSX/Playstation and SNK Neo Geo.
2.3 "Effective Date" shall mean the last date in which all parties
shall have signed this Agreement.
2.4 "Exclusive Licensed Product" shall mean the audiovisual work
tentatively entitled "TUROK: DINOSAUR HUNTER", in its current form and as
hereafter developed, including any adaptation, translation, derivative, sequel
or substantially similar game which is sold by LICENSEE as a Licensed Product
under this Agreement.
2.5 "Game Cartridge(s)" shall mean interchangeable plastic cartridges
adapted for use with the N64 System, housing the Game embodied in electronic
memory devices or comparable medium authorized by NINTENDO for storing and
playing Games on the N64 System.
2.6 "Game(s)" shall mean video game software compatible with the N64
System developed under this Agreement.
NINTENDO 64 LICENSE AGREEMENT
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2.7 "Guidelines" shall mean the "Nintendo 64 Packaging Guidelines" and
the "Nintendo 64 Development Manual" setting forth trademark, copyright and
related artwork standards, as published from time to time by NINTENDO.
2.8 "Independent Contractor" shall mean any third party agent,
consultant, contractor or independent programmer, other than LICENSEE.
2.9 "Licensed Copyright(s)" shall mean various copyrights in printed
materials, art or logo designs, trade dress, computer software, microcode,
electronic circuitry and rights in integrated circuit layout designs employed in
the N64 System.
2.10 "Licensed Intellectual Properties" shall mean individually,
collectively or in any combination, the Licensed Inventions, Licensed
Proprietary Information, Licensed Copyrights and Licensed Trademarks.
2.11 "Licensed Invention(s)" shall mean improvements and inventions
concerning the N64 System, including inventions which are or may become the
subject matter of various patents or patent applications.
2.12 "Licensed Product(s)" shall mean Game Cartridges (or comparable
medium authorized by Nintendo) for employing the Licensed Intellectual
Properties and having electronic memory devices storing the Games.
2.13 "Licensed Proprietary Information" shall mean any of the following
information relating to the N64 System: (a) all current or future information,
know-how, techniques, methods, information, tools, emulator boards, software
development specifications, and/or trade secrets, (b) any patents or patent
applications, (c) any business, marketing or sales data information, and (d) any
other information or data relating to development, design, operation,
manufacturing, marketing or sales. "Licensed Proprietary Information" shall
include information disclosed to LICENSEE by NINTENDO, NINTENDO's affiliated
companies, SGI, and/or other third parties working with NINTENDO. Such Licensed
Proprietary Information shall include all confidential information disclosed,
whether in writing, orally, visually, or in the form of drawings, technical
specifications, software, samples, pictures, models, recordings, or other
tangible items which contain or manifest, in any form, the Licensed Proprietary
Information. Licensed Proprietary Information shall not include: (a) data and
information which was in the public domain prior to LICENSEE's receipt of the
same hereunder, or which subsequently becomes part of the public domain by
publication or otherwise, except by LICENSEE's wrongful act or omission, (b)
data and information which LICENSEE can demonstrate, through written records
kept in the ordinary course of business, was in its possession without
restriction on use or disclosure, prior to its receipt of the same hereunder and
was not acquired directly or indirectly from NINTENDO under an obligation of
confidentiality which is still in force, (c) data and information which LICENSEE
can show was received by it from a third party who did not acquire the same
directly or indirectly from NINTENDO and to whom LICENSEE has no obligation of
confidentiality, (d) data and information which is required to be disclosed by
an authorized governmental or judicial entity, provided that LICENSEE shall
notify NINTENDO at least thirty (30) days prior to such disclosure.
2.14 "Licensed Trademarks" shall mean registered and unregistered
trademarks and trademark applications used in connection with the N64 System,
including "Nintendo(R)", "Nintendo 64(R)", "N64(TM)," "Official Nintendo Seal of
Quality(R)" and trade dress in the N64 System.
2.15 "Marketing Materials" shall mean marketing, advertising or
promotional materials which incorporate the Licensed Intellectual Properties
which are developed by or for LICENSEE to promote the sale of the Licensed
Products.
NINTENDO 64 LICENSE AGREEMENT
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2.16 "N64 Letter Agreement" shall mean the letter agreement between the
parties dated June 17, 1994 referring to the Exclusive Licensed Product.
2.17 "NCL" shall mean NINTENDO's parent company, Nintendo Co., Ltd. of
Kyoto, Japan.
2.18 "Nintendo 64 System" and "N64 System" shall mean the 64-bit
Nintendo 64 video game system, including the hardware, software and input
controller marketed by NINTENDO and Nintendo Co., Ltd.
2.19 "Other Agreements" shall mean that certain Non-Disclosure
Agreement for Nintendo 64 entered into between NINTENDO and LICENSEE with an
effective date of June 9, 1994.
2.20 "Product Proposal" shall mean a written proposal which provides a
detailed explanation of the Game.
2.21 "Schedule 1" shall mean the "Nintendo of America Inc. Price Sheet
N64 Licensed Game Paks" attached to this Agreement and incorporated by reference
into this Agreement.
2.22 "SGI" shall mean Silicon Graphics, Inc. and/or MIPS Technologies,
Inc.
2.23 "Term" shall mean three (3) years from the Effective Date.
2.24 "Territory" shall mean all countries within the Western
Hemisphere, including the United States, Canada, South America, Central America,
Mexico and all applicable territories and possessions.
3. GRANT OF LICENSE; RESERVATION OF RIGHTS BY NINTENDO
3.1 Grant. For the Term and in the Territory, NINTENDO hereby grants to
LICENSEE, and LICENSEE hereby accepts under the terms and conditions set forth
in this Agreement, a nonexclusive license to employ the Licensed Intellectual
Properties solely to develop and sell video games incorporated into Game
Cartridges for play on the N64 System. Except as may be permitted under a
separate written authorization from NINTENDO or Nintendo Co., Ltd., LICENSEE
shall not use the Licensed Intellectual Properties for any other purpose.
3.2 Reservation of Rights in the Licensed Intellectual Properties.
LICENSEE acknowledges NINTENDO and Nintendo Co., Ltd.'s right, title, and
interest in and to the Licensed Intellectual Properties and the goodwill
associated with the Licensed Trademarks. LICENSEE will not at any time do or
cause to be done any act or thing which in any way impairs or is intended to
impair any part of such right, title, interest or goodwill. LICENSEE shall not
represent that it has any ownership in the Licensed Intellectual Properties. Use
of the Licensed Intellectual Properties shall not create any right, title or
interest therein in LICENSEE's favor.
3.3 Reservation of Rights of Distribution Outside the Territory.
LICENSEE shall market and sell the Licensed Products only in the Territory.
LICENSEE shall not directly or indirectly export any Licensed Products from the
Territory nor shall LICENSEE knowingly permit or assist any third party in doing
so.
3.4 Reservation of Rights to Reverse Engineer. LICENSEE may utilize and
study the design, performance and operation of the N64 System and the Licensed
Proprietary Information solely for the purpose of developing software which is
compatible with the N64 System for license under this Agreement. LICENSEE shall
not, directly or indirectly, reverse engineer or aid or assist in the reverse
engineering of all or any part of the N64 System, including the hardware,
software, input controller and/or tools. For
NINTENDO 64 LICENSE AGREEMENT
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purposes of this Agreement, "reverse engineering" shall mean: (a) the x-ray
electronic scanning and/or physical or chemical stripping of semiconductor
components; (b) the disassembly, decompilation, decryption, simulation,
debugging or code tracing of microcode; and/or (c) the disassembly,
decompilation, decryption, simulation, debugging or code tracing of object code
or executable code, specifically including, but not limited to, any NINTENDO
supplied or developed libraries or microcode. The limitations set forth in this
Section 3.4 shall not preclude LICENSEE from engaging in reverse engineering of
any Game code which was developed solely by LICENSEE and related only to the
Game and was not supplied by nor derived from any code supplied by NINTENDO.
3.5 Reservation of Rights of Electronic Transmission. LICENSEE shall
not directly or indirectly duplicate, distribute or transmit Games via
electronic means or any other means now known or hereafter devised, including
without limitation, wireless, cable, fiber optic means, telephone lines,
satellite transmission, microwave or radio waves or over a network of
interconnected computers or other devices. Notwithstanding this limitation,
LICENSEE shall not be prohibited from the electronic transmission of Games
during the development process for the sole purpose of facilitating development;
provided, however, that no right of retransmission shall attach to any such
transmission, and, provided further, that LICENSEE shall use reasonable security
measures, customary within the industry, to reduce the risk of unauthorized
interception or retransmission of such transmissions.
3.6 Notification Obligations. LICENSEE shall promptly notify NINTENDO
of the loss or unauthorized use or disclosure of any Licensed Proprietary
Information and shall promptly act to recover any such information and/or
prevent further breach of the confidentiality obligations herein.
4. CONFIDENTIALITY
4.1 Disclosure of Proprietary Information. NINTENDO has and shall
during the Term provide LICENSEE with highly proprietary development
information, development tools, emulation systems, programming specifications
and related resources and information constituting and incorporating the
Licensed Proprietary Information to enable LICENSEE to develop video games for
use with the N64 System.
4.2 Confidentiality of Licensed Proprietary Information. LICENSEE shall
maintain all Licensed Proprietary Information as strictly confidential and will
use such Licensed Proprietary Information only in accordance with this
Agreement. LICENSEE shall limit access to the Licensed Proprietary Information
to LICENSEE's employees having a strict need to know and shall advise such
employees of their obligation of confidentiality as provided herein. LICENSEE
shall require each such employee to retain in confidence the Licensed
Proprietary Information pursuant to a written non-disclosure agreement between
LICENSEE and such employee. LICENSEE shall use its best efforts to ensure that
its employees working with or otherwise having access to Licensed Proprietary
Information shall not disclose or make unauthorized use of the Licensed
Proprietary Information.
4.3 Agent/Consultant Confidentiality. LICENSEE shall not disclose the
Licensed Proprietary Information to any Independent Contractor without
NINTENDO's prior written approval. Each approved Independent Contractor shall be
required to enter into a written non-disclosure agreement with NINTENDO prior to
receiving any access to or disclosure of the Licensed Proprietary Information.
4.4 SGI as a Third-Party Beneficiary. LICENSEE hereby acknowledges and
agrees that SGI shall be a third-party beneficiary of LICENSEE's confidentiality
obligations as set forth in this Section 4.
NINTENDO 64 LICENSE AGREEMENT
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5. DEVELOPMENT; QUALITY STANDARDS; ARTWORK; MANUFACTURING
5.1 Development and Sale of the N64 System Programs. During the Term,
LICENSEE may develop Games and/or sell Licensed Products for the N64 System in
accordance with this Agreement.
5.2 Exclusivity; Exclusive Licensed Product. For the Exclusive Licensed
Product, LICENSEE agrees that, commencing on the Effective Date and continuing
for a period of one (1) year from NINTENDO's first shipment of such Exclusive
Licensed Product to LICENSEE, the Game incorporated into such Exclusive Licensed
Product shall not be sold anywhere in the Territory by LICENSEE or by any third
party for play on any Competing System. Except as provided herein with regard to
the Exclusive Licensed Product, or as may otherwise be limited by the legitimate
intellectual property rights of NINTENDO or any third party, LICENSEE shall
retain all rights with regard to the adaptation of Games for development and
sale in any other format, including on any Competing System.
5.3 Submission of Game Concept. Before commencing development of a
Game, LICENSEE shall submit to NINTENDO for approval, a Product Proposal. Such
Product Proposal must include a detailed explanation of the manner in which the
Game will utilize and exploit: (a) the unique 3-D capabilities and high quality
graphics display of the N64 System; (b) the complex, high-capacity processing
speed of the N64 System; and, (c) the dynamic interfaces and touch control
features of the unique N64 System controller. For that purpose, the Product
Proposal shall include: (a) a description of the proposed Game; (b) the
development team profile, including information regarding any Independent
Contractor which LICENSEE proposes to retain to work on the Game; (c) a
description of any special hardware or software requirements; and, (d) the
anticipated completion date of the proposed Licensed Product. Subsequent to
acceptance and approval of a Product Proposal, LICENSEE shall notify NINTENDO in
writing of any material proposed changes in the Product Proposal and/or the
proposed Licensed Product. From time to time, at approximately quarterly
intervals or such other reasonable times NINTENDO may establish for purposes of
ensuring utilization and exploitation of the N64 System in the manner set forth
above, LICENSEE shall submit work-in-progress on the Game to NINTENDO for
further review in accordance with the criteria set forth herein. NINTENDO shall
not unreasonably withhold or delay any approval provided for herein and shall
give such approval or disapproval in a prompt manner.
5.4 Delivery of Completed Game. Upon completion of a Game, LICENSEE
shall deliver to NINTENDO one (1) prototype of the Game in a format specified by
NINTENDO, together with written user instructions and a complete screen text
script. NINTENDO shall promptly evaluate the Game with regard to: (a) its
technical compatibility with and error-free operation on the N64 System; (b) the
suitability of the Game content, taking into account reasonable standards set
forth in the Guidelines; and, (c) whether the Game achieves the objectives set
forth in LICENSEE's approved Product Proposal. LICENSEE shall have satisfied the
Game content suitability criteria by providing NINTENDO with proof that the Game
has been provided with a certificate of a rating other than ADULTS ONLY (or its
equivalent) from the Entertainment Software Ratings Board or comparable
independent ratings body which reviews and certifies product for violent or
sexual content.
5.5 Approval of Completed Game. NINTENDO shall, within a reasonable
period of time after receipt, approve or disapprove such Game. If such Game is
disapproved, NINTENDO shall specify in writing the reasons for such disapproval
and state what corrections and/or improvements are necessary. After making the
necessary corrections and/or improvements, LICENSEE shall submit a revised Game
for approval by NINTENDO. The approval of any Game by NINTENDO shall not relieve
LICENSEE of its sole responsibility for the development, quality and operation
of the Game or in any way create any warranty for a Licensed Product by
NINTENDO. NINTENDO shall not unreasonably withhold or delay any approval
provided for herein.
NINTENDO 64 LICENSE AGREEMENT
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5.6 Development and Quality of Artwork. In connection with the
submission of a proposed Licensed Product to NINTENDO, LICENSEE shall submit all
Artwork to NINTENDO. All Artwork shall conform to the requirements set forth in
the Guidelines. Within fifteen (15) business days of receipt of the Artwork,
NINTENDO shall approve or disapprove the Artwork based upon the Guidelines. If
any of the Artwork is disapproved, NINTENDO shall specify in writing the reasons
for such disapproval and state what corrections and/or improvements are
necessary. After making the necessary corrections and/or improvements to the
disapproved Artwork, LICENSEE shall resubmit new Artwork for approval by
NINTENDO. NINTENDO shall not unreasonably withhold or delay its approval of any
Artwork.
5.7 Appointment of NCL as Manufacturer. LICENSEE hereby appoints NCL,
and NCL hereby accepts appointment, as manufacturer of the Licensed Products.
LICENSEE shall purchase from NCL through NINTENDO all of its requirements for
the Licensed Products. NCL shall have the sole responsibility for establishing
and fulfilling all aspects of the manufacturing process, including selecting the
location of and specifications for any manufacturing facilities, appointing
suppliers and subcontractors, and managing all work-in-progress and finished
goods inventory. NCL shall acquire and retain responsibility for all equipment,
tooling, molds or masks used in connection with the manufacture of the Licensed
Products.
5.8 Manufacture of Licensed Products. Upon approval of a Game and the
Artwork and upon receipt from LICENSEE of an order in accordance with Section 7
herein, NCL will manufacture the Licensed Products for LICENSEE, including the
Artwork.
5.9 Retention of Sample Licensed Products. NCL may, at its own expense,
manufacture samples of the Licensed Products, only to the extent necessary, to
be used by NINTENDO for archival purposes, legal proceedings against infringers
of the Licensed Intellectual Properties, and for other lawful purposes.
6. PURCHASE PRICE; PAYMENT; DELIVERY OF COMPLETED LICENSED PRODUCT
6.1 Minimum Initial Orders. Upon placement of an initial order,
LICENSEE shall order a minimum quantity of Ten Thousand (10,000) units of a
Licensed Product.
6.2 Subsequent Minimum Orders. LICENSEE may subsequently order
additional Licensed Product in a minimum quantity of Five Thousand (5,000) units
per title.
6.3 Purchase Price. The purchase price to be paid by LICENSEE to
NINTENDO for the Licensed Products shall be in accordance with NINTENDO's
pricing schedule currently set forth in the attached Schedule 1. The purchase
price includes the cost of manufacturing, printing and packaging the Licensed
Products and a royalty for the use of the Licensed Intellectual Properties.
Schedule 1 is subject to change by NINTENDO at any time without notice.
6.4 Payment. At the time an order is placed, LICENSEE shall provide to
NINTENDO an irrevocable letter of credit in favor of NINTENDO and payable at
sight, issued by a bank acceptable to NINTENDO and confirmed, at LICENSEE's
expense, if requested by NINTENDO. The letter of credit shall be in United
States dollars in an amount equal to the purchase price of the Licensed Products
ordered. All associated banking charges are for LICENSEE's account.
6.5 Shipment and Delivery. The Licensed Products shall be delivered
F.O.B. Japan, with shipment at LICENSEE's direction and expense. Delivery shall
be made within a reasonable period of time following placement of LICENSEE's
order. Orders may be delivered by NINTENDO in partial shipments, each directed
to no more than two (2) destinations designated by LICENSEE in the Territory.
Title to the Licensed Products shall vest in accordance with the terms of the
applicable letter of credit.
NINTENDO 64 LICENSE AGREEMENT
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7. MARKETING, SALE AND RENTAL OF THE LICENSED PRODUCTS
7.1 Marketing Materials. LICENSEE agrees that any Marketing Materials
shall all be of high quality and shall comply with the Guidelines.
7.2 Submission of Proposed Marketing Materials. Prior to actual use or
distribution, LICENSEE shall submit to NINTENDO for review and evaluation
initial samples of all Marketing Materials. NINTENDO shall, within fifteen (15)
business days of receipt of such samples, approve or disapprove of the quality
of such samples. If any of the samples are disapproved as to quality, NINTENDO
shall specify the reasons for such disapproval and state what corrections and/or
improvements are necessary. After making the necessary corrections and/or
improvements to the disapproved samples, LICENSEE may resubmit new samples for
approval by NINTENDO as to quality. No Marketing Materials shall be distributed
or utilized by LICENSEE without obtaining prior written approval as to quality
by NINTENDO. NINTENDO shall not unreasonably withhold or delay its approval of
the proposed Marketing Materials.
7.3 Warranty and Repair. With respect to the Licensed Product, LICENSEE
shall provide to the original consumer a minimum ninety (90) day limited
warranty, comparable to that offered by NINTENDO. LICENSEE shall also provide to
the original consumer, either directly or indirectly through authorized service
centers, reasonably accessible product service, including out-of-warranty
service for a period of three (3) years following sale of the Licensed Product.
In the event LICENSEE is unable to obtain sufficient quantities of repair parts
for service obligations from defective and/or product returns, NINTENDO shall
cooperate in providing reasonable quantities of repair parts to LICENSEE at its
standard cost.
7.4 Business Facilities; Sales of Game Cartridges. LICENSEE agrees to
develop, maintain and utilize during the Term: (a) suitable office facilities
within the Territory, adequately staffed to enable LICENSEE to fulfill all
responsibilities under this Agreement; (b) necessary warehouse, distribution,
marketing, sales, collection and credit operations to facilitate proper handling
of the Licensed Product; and, (c) customer service and game counseling support,
including telephone service, to adequately support the Licensed Product.
7.5 Defects; Recall. In the event of a material programming defect in
the Licensed Product, which defect in the reasonable judgment of NINTENDO would
significantly impair the ability of a consumer to play the Licensed Product,
NINTENDO may require the LICENSEE to recall the Licensed Product and undertake
suitable repairs or replacements prior to sale.
7.6 Rental. In the event LICENSEE elects to engage in the commercial
rental of the Licensed Products within the Territory on such terms and
conditions as LICENSEE shall determine, LICENSEE shall secure appropriate
authorizations and/or assignments from the author(s) of the copyrightable
elements in the computer programs for the Licensed Product. LICENSEE shall
clearly provide notice on the Artwork for each Licensed Product of any rental
right or reservation thereof.
7.7 Nintendo Promotional Materials, Publications and Events. At its
option, NINTENDO may: (a) insert in the packaging for the Licensed Product
promotional materials concerning Nintendo Power(R) magazine; (b) utilize screen
shots, package art and related art and information regarding the Licensed
Product in Nintendo Power(R) or other media or marketing programs which promote
NINTENDO products; and (c) exercise public performance rights of the Licensed
Product, related trademarks and art in NINTENDO sponsored contests, tours and
events which generally promote NINTENDO products.
NINTENDO 64 LICENSE AGREEMENT
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8. LICENSEE'S COPYRIGHTS AND TRADEMARKS
8.1 Copyright and Trademark Warranties. LICENSEE represents and
warrants that, throughout the Territory, LICENSEE is either: (a) the sole owner
of all right, title and interest in and to the trademarks, copyrights and
Artwork used on or in association with the Licensed Products; or (b) the holder
of sufficient rights to the trademarks, copyrights and Artwork which have been
licensed from a third party for use in the Licensed Product.
8.2 Licensee's Indemnification. LICENSEE shall indemnify and hold
NINTENDO harmless from any claims, losses, liabilities, damages, expenses and
costs, including, without limitation, reasonable attorneys' fees and costs,
which result in whole or in part from: (a) a breach of any of the
representations or warranties provided by LICENSEE herein; (b) any claim of
infringement of any third party's intellectual property rights with respect to
the Licensed Product, excluding claims based solely upon NINTENDO's trademarks,
copyrights and patents; (c) any claim of bodily injury (including death) or
property damage arising out of, or in connection with, the development, sale
and/or use of any of the Licensed Products, or (d) any act or omission, whether
negligent of otherwise, of LICENSEE or its employees or agents, including, but
not limited to, claims of product liability. NINTENDO shall give LICENSEE prompt
written notice of the assertion of any such claim, provided, further, that
LICENSEE shall have the right to select counsel and control the defense and/or
settlement of any such claim, subject to the right of NINTENDO to participate in
any such action or proceeding at its own expense with counsel of its own choice.
NINTENDO shall indemnify and hold LICENSEE harmless from any claims, losses,
liabilities, damages, expenses and costs, including, without limitation,
reasonable attorneys' fees and costs, which result from any act or omission,
whether negligent of otherwise, of NINTENDO or its employees or agents,
including, but not limited to, claims of product liability.
8.3 Insurance. LICENSEE shall, at its own expense, obtain a policy of
general liability insurance by a recognized insurance company. Such policy of
insurance shall be in an amount of not less than Five Million Dollars
($5,000,000 USD) and shall provide for adequate protection against any suits,
claims, loss or damage by the Licensed Products. Such policy shall name NINTENDO
as an additional insured and may not be canceled without thirty (30) days prior
written notice to NINTENDO. A Certificate of Insurance shall be provided to
NINTENDO's Licensing Department within thirty (30) days of the Effective Date.
If LICENSEE fails to maintain such insurance during the Term, NINTENDO may
secure and maintain such insurance at LICENSEE's expense.
9. LIMITATION OF LIABILITY
9.1 Disclaimer of Licensed Intellectual Properties. NINTENDO makes no
representations, guarantees or warranties concerning the scope or validity of
the Licensed Intellectual Properties, and does not warrant that the sale of the
Licensed Products by LICENSEE will not infringe upon the patent, trade secret,
copyright, mask work or trademark rights of another in the Territory. THE RISK
OF INFRINGEMENT IS HEREBY ASSUMED BY LICENSEE, SUBJECT TO PROVISIONS OF THE
ABOVE SECTION 8.2(b).
9.2 Warranty Disclaimer. NINTENDO DISCLAIMS ANY AND ALL WARRANTIES OF
THE LICENSED PRODUCTS AS BETWEEN NINTENDO AND LICENSEE AND AS BETWEEN NINTENDO
AND ANY THIRD PARTY PURCHASERS FROM LICENSEE. LICENSEE PURCHASES AND ACCEPTS ALL
LICENSED PRODUCTS FROM NINTENDO ON AN "AS IS" AND "WHERE IS" BASIS AND WITHOUT
ANY WARRANTIES, EXPRESS OR IMPLIED. WITH RESPECT TO THE LICENSED PRODUCTS,
NINTENDO DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A GENERAL
OR PARTICULAR PURPOSE AND SHALL IN NO EVENT BE LIABLE FOR ANY INCIDENTAL AND/OR
CONSEQUENTIAL DAMAGES OF LICENSEE, ITS RETAILERS OR CUSTOMERS. LICENSEE SHALL
NINTENDO 64 LICENSE AGREEMENT
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BE SOLELY RESPONSIBLE FOR PROVIDING WARRANTY AND REPAIR/REPLACEMENT SERVICES FOR
ANY DEFECTIVE LICENSED PRODUCTS.
10. INFRINGEMENT OF LICENSED INTELLECTUAL PROPERTIES AND
LICENSEE'S TRADEMARKS AND COPYRIGHTS
10.1 Reporting. In the event: (a) any claim is asserted against either
party alleging that any of the Licensed Intellectual Properties or a Licensed
Product constitutes an infringement of another's rights; or, (b) either party
discovers that any of the Licensed Intellectual Properties or LICENSEE's
copyrights or trademarks used in connection with the Licensed Products have been
infringed by a third party, then the party with such knowledge shall promptly
notify the other party.
10.2 Licensed Intellectual Properties. NINTENDO shall have the sole
right, at its expense, to commence and/or defend a legal action or negotiate a
settlement relating to any alleged infringement by the Licensed Intellectual
Properties. LICENSEE agrees to give reasonable assistance in any such legal
action, but at no expense to it. NINTENDO shall be entitled to all of the
recovery or damages collected as a result of such legal action or negotiated
settlement. In the event of a legal action against LICENSEE alleging an
infringement by the Licensed Intellectual Properties as incorporated into
LICENSEE's Licensed Products which NINTENDO affirmatively elects in writing not
to defend, LICENSEE may defend or settle such legal action, at its option and
expense. NINTENDO agrees to provide reasonable assistance in defending any such
legal action. LICENSEE agrees to keep NINTENDO fully informed with respect to
developments in any such legal action and to provide NINTENDO reasonable notice
of the terms of any proposed settlement and to consider any comments by NINTENDO
before settlement is made.
10.3 Infringement of Licensed Products. LICENSEE shall take reasonable
steps to abate any infringement of LICENSEE's copyrights and trademarks in the
Licensed Products. LICENSEE shall also take all reasonable and necessary steps,
including legal action, to defend against any alleged infringement caused by any
of LICENSEE's software programs developed under this Agreement or any Artwork,
title or designation used in conjunction with any of the Licensed Products.
NINTENDO shall give to LICENSEE reasonable assistance and cooperation in any
such legal action, but at no expense to NINTENDO.
11. TERM AND TERMINATION
11.1 Default or Breach. In the event that either party is in default or
commits a breach of this Agreement which is not cured within thirty (30) days
after written notice thereof, then this Agreement shall automatically terminate
at the end of such thirty (30) days notice or upon a later date if specified in
such notice.
11.2 Termination Other Than by Breach. Upon the expiration of this
Agreement or its termination other than by LICENSEE's breach, LICENSEE shall
have a period of one hundred eighty (180) days to sell any unsold Licensed
Products. All Licensed Products in LICENSEE's control following expiration of
such sell-off period, shall be destroyed by LICENSEE within ten (10) days.
11.3 Termination by LICENSEE's Breach. If this Agreement is terminated
by NINTENDO as a result of a breach of its terms and conditions by LICENSEE,
LICENSEE shall immediately cease all distribution, promotion or sale of any
Licensed Products. All Licensed Products in LICENSEE's control as of such
termination shall be destroyed by LICENSEE within ten (10) days.
11.4 Licensed Intellectual Property Rights. Upon expiration and/or
termination of this Agreement, LICENSEE will cease all use of the Licensed
Intellectual Properties for any purpose, and will not disclose to third parties
any Licensed Proprietary Information. LICENSEE shall also return to NINTENDO all
writings, drawings, models, data and other materials and things in LICENSEE's
possession
NINTENDO 64 LICENSE AGREEMENT
PAGE 9
<PAGE>
or in the possession of any past or present employee, agent or contractor
receiving the information through LICENSEE, which constitute or relate to or
disclose any Licensed Proprietary Information without making copies or otherwise
retaining any such information.
11.5 Termination by Nintendo's Breach. If this Agreement is terminated
by LICENSEE as a result of a breach of its terms or conditions by NINTENDO,
LICENSEE may continue to sell the Licensed Products in the Territory until the
expiration of the Term, at which time the provisions herein relating to
termination other than by default of LICENSEE shall apply to any unsold Licensed
Products.
12. GENERAL PROVISIONS
12.1 Nonassignability/Sublicensing. This Agreement is personal to
LICENSEE and may not be sold, assigned, delegated, sublicensed or otherwise
transferred or encumbered, including by operation of law or by the sale or
transfer of more than fifty percent (50%) of the stock, assets or ownership
interest or control of LICENSEE, without the prior written consent of NINTENDO.
12.2 Force Majeure. Neither party shall be liable for any breach of
this Agreement occasioned by any cause beyond the reasonable control of such
party, including governmental action, war, riot or civil commotion, fire,
natural disaster, labor disputes, restraints affecting shipping or credit, delay
of carriers, inadequate supply of suitable materials, or any other cause which
could not with reasonable diligence be controlled or prevented by the parties.
In the event of material shortages, including shortages of microcomputer chips
necessary for production of the Licensed Products, NINTENDO reserves the right
to allocate essential materials among itself and its licensees in good faith.
12.3 Waiver; Severability; Integration. The failure of any party to
enforce any provision of this Agreement shall not be construed to be a waiver of
such provision or of the right of such party to thereafter enforce such
provision. In the event that any term, clause or provision of this Agreement
shall be construed to be or adjudged invalid, void or unenforceable, such term,
clause or provision shall be construed as severed from this Agreement, and the
remaining terms, clauses and provisions shall remain in effect. This Agreement
constitutes the entire agreement between the parties relating to the subject
matter hereof, provided, however, that the Other Agreements shall remain in
effect, except as may be modified by specific reference herein. All prior
negotiations, representations, agreements and understandings, including the N64
Letter Agreement, are merged into, extinguished by and completely expressed by
this Agreement. Any amendment to this Agreement shall be in writing, signed by
both parties.
12.4 Governing Law: Venue. This Agreement shall be governed by, subject
to and construed under the laws of the State of Washington. Any legal actions
prosecuted or instituted by NINTENDO or by LICENSEE under this Agreement, with
respect to any matters arising under or growing out of this Agreement, shall
only be brought in a court of competent jurisdiction in King County, Washington
and each party hereby consents to the jurisdiction and venue of such courts for
such purposes.
12.5 Equitable Relief. LICENSEE acknowledges that in the event of its
breach of this Agreement, no adequate remedy at law may be available to NINTENDO
and that NINTENDO shall be entitled to seek injunctive or other equitable relief
in addition to any relief available at law.
12.6 Attorneys' Fees. In the event it is necessary for either party of
this Agreement to undertake legal action to enforce any of the terms, conditions
or rights contained herein, or to defend any such action, then the prevailing
party in any such action shall be entitled to recover from the other party all
reasonable attorneys' fees, costs and expenses relating to such legal action.
NINTENDO 64 LICENSE AGREEMENT
PAGE 10
<PAGE>
12.7 Notices. All notices required or permitted under this Agreement
shall be sufficiently given when: (a) personally served or delivered; (b)
deposited, postage prepaid, with a guaranteed air courier service, addressed as
stated herein, or to such other person or address either party may designate in
a notice; or, (c) by facsimile, with an original sent concurrently by first
class U.S. mail. Notice shall be deemed effective upon the earlier of actual
receipt or two (2) business days after transmittal.
12.8 Counterparts; Signature by Facsimile. This Agreement may be signed
in counterparts, which shall together constitute a complete Agreement. A
signature transmitted by facsimile shall be considered an original for purposes
of this Agreement.
IN WITNESS WHEREOF, NINTENDO and LICENSEE have entered into this Agreement on
the dates set forth below.
NINTENDO: LICENSEE:
NINTENDO OF AMERICA INC. ACCLAIM ENTERTAINMENT, INC.
By: /s/ By: /s/
-------------------------------- ------------------------------
Its: Executive Vice President, Its: CEO
Administration Date: 7/9/97
Date: 9/2/97
NINTENDO 64 LICENSE AGREEMENT
PAGE 11
<PAGE>
SCHEDULE 1
NINTENDO OF AMERICA INC. PRICE SHEET
N64 LICENSED GAME PAKS
Memory Capacity NOA Price
32 Megabit $ *
32 Megabit + E(2)ROM $ *
64 Megabit $ *
64 Megabit + E(2)ROM $ *
96 Megabit $ *
96 Megabit + E(2)ROM $ *
Price includes an instruction manual up to 40 pages. There will be an extra
charge for manuals larger than 40 pages (including the front and back cover).
EXTRA PACKAGING
(Must be ordered with product on separate PO)
Game Pak Box $ *
Instruction Manual
(under 40 pages) $ *
Instruction Manual
(over 40 pages) $ *
Game Pak Label $ *
Game Pak Poster $ *
Warranty Card $ *
ALL PRICES SUBJECT TO CHANGE WITHOUT PRIOR NOTICE
1/30/97
* See legend on page 1 of this document
<PAGE>
FIRST AMENDMENT
TO CONFIDENTIAL LICENSE AGREEMENT FOR
NINTENDO 64 VIDEO GAME SYSTEM
THIS FIRST AMENDMENT ("First Amendment") amends that certain "Confidential
License Agreement for Nintendo 64 Video Game System" dated September 2, 1997
("Original Agreement") between Nintendo of America Inc. ("Nintendo") and Acclaim
Entertainment, Inc. ("Licensee").
NOW, THEREFORE, the parties agree as follows:
1. The opening paragraph is hereby deleted in its entirety and replaced as
follows:
THIS AGREEMENT is entered into between NINTENDO OF AMERICA
INC., a Washington corporation with an address for notice
purposes of 4820 150th Avenue N.E., Redmond, WA 98052 (Fax:
425-882-3585) (hereinafter referred to as "NINTENDO"), and
ACCLAIM ENTERTAINMENT, INC., a New York corporation with an
address for notice purposes of One Acclaim Plaza, Glen Cove,
NY 11542 (Fax: 516-656-2040), Attention: President and ACCLAIM
ENTERTAINMENT LTD., a United Kingdom corporation with an
address for notice purposes of 112-120 Brompton Road,
Knightsbridge, London SW3 1JJ, United Kingdom (Fax:
011-44-171-225-0033), Attention: President (hereinafter
collectively referred to as "LICENSEE").
2. Section 2.3, Definition of Effective Date, is hereby deleted in its entirety
and replaced as follows:
"Effective Date" shall mean February 20, 1997.
3. This First Amendment shall be effective upon the Effective Date and may be
executed in counterparts, which together shall constitute a single First
Amendment. For the convenience of the parties, transmission of an authorized
signature by facsimile shall be acceptable. Except as set forth herein, all
terms and conditions of the Original Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have entered into this First Amendment.
NINTENDO: LICENSEE:
NINTENDO OF AMERICA INC. ACCLAIM ENTERTAINMENT, INC.
By: /s/ By: /s/
------------------------------ -------------------------------
Name: John Bauer Name: Gregory Fischbach
Title: Executive Vice President, Its: CEO, President and Chairman
Administration Date: October 31, 1997
Date: 11/14/97
ACCLAIM ENTERTAINMENT LTD.
By: /s/
--------------------------------
Name: Gregory Fischbach
Title: CEO, President and Chairman
Date: October 31, 1997
