Licensing Agreement: Interesting Particulars...
Taken from the Prospectus (March/April, 1998)
"
Certain minimum sales quotas must be achieved by the Company to sustain the rights
granted thereunder. The time periods for satisfying these sales quotas are based upon
the date set by the FCC for which all televisions sold in the U.S. must be equipped with
v-chip type technology (the "FCC Compliance Date"). The sales quotas are summarized
below:
ú with respect to sales of television converters (which includes the ViewControlTM
V-Chip Decoder) and ASIC devices in the United States, TVE must realize sales of
converters or ASIC devices of at least 500,000 units prior to the 12 month anniversary
of the FCC Compliance Date, and 1 million units during each subsequent 12 month
period. If TVE fails to meet these requirements, subject to TVE's ability to cure such
default as described below, VCCE may terminate the licence with respect to television
converters and ASIC devices; and
ú with respect to sales of Other Devices in the United States, TVE must realize sales of
Other Devices in the United States of (i) 1 million units prior to the 18 month
anniversary of the FCC Compliance Date; and (ii) 2.5 million units during each
subsequent 12 month period following the initial 18 month period. If TVE fails to meet
these requirements, subject to TVE's ability to cure such default as described below,
VCCE may terminate the licence with respect to Other Devices.
The agreements provide that any shortfall in any quota period may be made up by sales
in the quota period following provided that the minimum quota in such subsequent quota
period is also satisfied or by the payment to VCCE of the amount that would have
otherwise been paid to VCCE if the minimum sales quota in the quota period had been
achieved.
The agreements may be terminated by VCCE upon the occurrence of certain
specified events, including non-payment by TVE of amounts owing to VCCE, the
insolvency or bankruptcy of TVE and the failure of TVE to sub-license the V-Chip
Technology to manufacturers of televisions with at least 10% of the sales of televisions in
the U.S. marketplace in 1996 by the FCC Compliance Date. Upon termination, all
rights in the V-Chip Technology will revert to VCCE."
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Graham |
