Exhibit (10)(f)(ii)
ADDENDUM
THIS ADDENDUM is entered as of January 11, 1995, by and between
XXXXXX COMPANY OF JAPAN, LIMITED, a corporation duly organized and existing
under the laws of Japan, having its principal office at 12, 3-Chome, Moriyacho,
Xxxxxxxx-xx, Xxxxxxxx 000, Xxxxx (hereinafter referred to as "Licensor"), and
ALLIED DIGITAL TECHNOLOGIES CORP., a corporation duly organized and existing
under the laws of the State of Delaware U.S.A., having an office and place of
business at 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000- 0000, X.X.X.
(hereinafter referred to as "Licensee").
W I T N E S S E T H:
WHEREAS, on January 11, 1995, Licensee was formed as a result of a
merger between Allied Film Laboratory, Inc. ("Allied"), a corporation organized
and existing under the laws of the State of Michigan, U.S.A., having its
principal office at 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, U.S.A., and
HMG Digital Technologies Corp. d/b/a Hauppauge Manufacturing Group ("HMG"), a
corporation duly organized and existing under the laws of the State of New York,
U.S.A., having its principal office at 00 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx
00000, X.X.X.; and
WHEREAS, Allied was a party to that certain VHS Cassette License
Agreement For Duplicators dated as of July 1, 1991 (as amended, supplemented or
otherwise modified, the "Allied License Agreement") between Allied and Licensor;
and
WHEREAS, Hauppauge Record Manufacturing, Ltd. ("HRM"), a wholly
owned subsidiary of HMG, was a party, as the successor by merger with Hauppauge
Video Manufacturing, Ltd., to that certain VHS License Agreement For Duplicators
dated as of April 12, 1989 (as amended, supplemented or other modified, the "HNG
License Agreement") between HRM and Licensor; and
WHEREAS, Licensee assumed the business assets and liabilities of
Allied and HMG, including the Allied License Agreement and the HNG License
Agreement; and
WHEREAS, Licensor and Licensee are parties to a VHS Cassette License
Agreement For Duplicators dated as of July 1, 1991 (the "Duplicator Agreement"),
pursuant to which Licensee is granted, subject to its full compliance with all
of the terms and conditions of the Duplicator Agreement, a worldwide license to
use certain intellectual property rights and proprietary information owned by
Licensor; and
WHEREAS, Licensor and Licensee wish to amend certain terms and
conditions of the Duplicator Agreement as set forth herein and to otherwise
reaffirm such Duplicator Agreement in its entirety.
2
NOW, THEREFORE, in consideration of the mutual agreements and
covenants of the parties, it is agreed as follows:
1. Notwithstanding the provisions of Article 5(1)iii. of the
Duplicator Agreement to the contrary, in any calendar year in which Licensee
shall sell or otherwise transfer in excess of 50 million Licensed Products,
Licensee may elect to pay to Licensor a flat royalty payment of $1,000,001 for
such calendar year. Such flat royalty payment is to be paid to Licensor in four
equal quarterly payments to be made by wire transfer as provided in Article 5 of
the Duplicator Agreement. If Licensee shall sell or otherwise transfer less than
50 million Licensed Products in a calendar year or, if Licensee shall not
exercise the election herein granted, then Licensee shall pay royalty payments
to Licensor in accordance with the provisions of Article 5(1)iii. of the
Duplicator Agreement, as herein amended.
2. Paragraph (1)iii.(b) of Article 5 shall be re-numbered to become
paragraph (1)iii.(b-1) and shall be further amended by adding the words "until
March 31, 1993," before the word "Eighty" in the first line thereof.
3. Article 5 of the Duplicator Agreement shall be amended to include
the following as paragraph (1)iii.(b-2):
3
(b-2) On or after April 1, 1993, Eighty Seven Thousand Five Hundred
Dollars (U.S. $87,500) plus Two Point Thirty Three Cents (2.33
cents) for each Licensed Product in excess of 3.75 million pieces
sold or otherwise transferred by Licensee during such quarter,
provided, however, that if Licensee can demonstrate to Licensor's
reasonable satisfaction that certain of the Licensed Products sold
or otherwise transferred by Licensee during such quarter have a
recording time of thirty (30) minutes or shorter ("Short
Cassettes"), then the royalty rate of 1.75 cents for each such Short
Cassette in excess of 3.75 million pieces shall apply. the number of
Short Cassettes in excess of 3.75 million pieces shall be prorated
based on the number of Short Cassettes in the total umber of
Licensed Products sold or otherwise transferred by Licensee during
such quarter. For example, if Licensee sells or otherwise transfers
a total number of 4,000,000 pieces of Licensed Products including
1,000,000 pieces of Short Cassettes, then the total royalty shall be
calculated as follows:
$87,500 + (4,000,000 - 3,750,000) x 2.33 cents x 0.75 + (4,000,000 -
3,750,000) x 1.75 cents x *0.25 =
4
$92,962.50. *The proportion of Short Cassettes is
25% of the total number of Licensed Products
(1,000,000 pieces/4,000,000 pieces).
4. With respect to Licensor's enforcement of the trademark,
technical information and patent rights referred to in the Duplicator Agreement
("Intellectual Property Rights"), Licensor warrants and represents as follows:
a. Article 5(1) of the Duplicator
Agreement, as amended by this Addendum,
accurately reflects the current royalty
rates which Licensor charges to U.S.
duplicators of video cassettes pursuant
to JVC's standard VHS Cassette License
Agreements;
b. Except as may be set forth in the letter
from Licensor to Allied dated July 11,
1994, a copy of which is annexed hereto
and made a part hereof, all of the U.S.
duplicators who have entered into VHS
Cassette License Agreements ("Licensed
Duplicators") have fulfilled their
royalty obligations to Licensor as of
the date of such letter, which
obligations are as set forth in Article
5(1) of the Duplicator Agreement;
5
c. With respect to any Licensed Duplicators
identified in the annexed letter dated
July 11, 1994, Licensor has notified
such Licensed Duplicators of the
delinquent status of their royalty
obligations; and Licensor warrants and
represents that it will take all steps
reasonably necessary, in the sole
exercise of its reasonable discretion,
to insure that such delinquent Licensed
Duplicators comply with their royalty
obligations;
d. Licensor will use its best efforts to
encourage U.S. duplicators and loaders
who are using Licensor's Intellectual
Property Rights to enter into VHS
Cassette License Agreements;
e. Licensor agrees that it will continue to
enforce its Intellectual Property Rights
to the same extent that it is presently
enforcing such rights; and,
f. On or before July 1, 1995 and on each
July 1 thereafter, Licensor will submit
to Licensee a certification to the
effect that each of the warranties and
6
representations set forth in paragraphs 4(a)-4(e) of
this Addendum are current as of that date, except for
any exclusions from such warranties and representations,
which exclusions will be fully identified.
5. Within sixty (60) days after execution of the Duplicator
Agreement by Licensee, Licensee shall deliver to Licensor all royalty statements
which reflect the total volume of Licensed Products sold or otherwise
transferred by HMG, and the royalty due thereon, which royalty statements were
not previously delivered to Licensor by HMG. Simultaneously, Licensee shall also
deliver to Licensor all royalty statements which reflect the total volume of
Licensed Products sold or otherwise transferred by Allied, and the royalty due
thereon, which royalty statements were to previously delivered to Licensor by
Allied.
6. Licensee shall pay to Licensor the combined total of all
outstanding royalty payments owed by both Allied and HMG (collectively, the
"Outstanding Royalty Payment") in four equal payments, the first of which shall
be paid at the same time that Licensee delivers to Licensor the royalty
statements required in paragraph 5 hereof. Thereafter, each remaining payment of
the Outstanding Royalty Payment shall be paid to Licensor within sixty (60)
7
days after the preceding payment. All four payments are to be paid by
wire-transfer in accordance with the provisions of Article 5 of the Duplicator
Agreement.
7. To the extent either Allied or HMG sold or otherwise transferred
any Licensed Products during the first calendar quarter of 1995, such Licensed
Products shall be reported by Licensee to Licensor as part of the volume of
Licensed Products sold or otherwise transferred by Licensee shall pay all
royalties due thereon.
8. Except as otherwise provided in this Addendum, the terms and
conditions of the Duplicator Agreement shall remain in full force and effect.
8
IN WITNESS WHEREOF, the parties have set their hands and seals on
the day and year first above written.
LICENSOR:
XXXXXX COMPANY OF JAPAN, LIMITED
On: September 27, 1995 By: /s/ Takeo Shuzui
----------------------------
Takeo Shuzui, President
At: Yokohama, Japan
ATTEST:
/s/ Yoshitaka Honda
---------------------------
Yoshitaka Honda, Manager
Intellectual Property Dept.
LICENSEE:
ALLIED DIGITAL TECHNOLOGIES CORP.
On: August 23, 1995 By: /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
President/CEO
At: Detroit, Michigan
ATTEST:
/s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx
9