International Software Distribution Agreement - Japan

METACREATIONS CORPORATION
INTERNATIONAL SOFTWARE DISTRIBUTION AGREEMENT


This INTERNATIONAL SOFTWARE DISTRIBUTION AGREEMENT ("Agreement") is entered
into as of the 1st day of August , 1997 ("Effective Date") by and between
METACREATIONS INTERNATIONAL, Ltd., a Dublin corporation ("MetaCreations"),
and Marubeni Corporation, a Japanese corporation ("Distributor") with
reference to the following:


MetaCreations is engaged in the business of developing, producing
and marketing software programs. Distributor has represented to MetaCreations
that it has the facilities, personnel and technical expertise to market and
license the MetaCreations products in the Territory defined herein.
Distributor wishes to obtain, and MetaCreations is willing to grant
Distributor, a license to market the MetaCreations products in the Territory.


The parties agree as follows:


1. DEFINITIONS


For purposes of this Agreement, the following terms shall have the
respective meanings indicated below:


1.1 The term "Software" shall mean, individually and/or collectively,
the computer programs encoded on software diskettes in the form generally
released by MetaCreations listed in and more fully described in Exhibit A
attached hereto.


1.2 The term "Documentation" shall mean the user guides, reference
manuals, and other materials developed by MetaCreations for use in connection
with the Software.


1.3 The term "Products" shall mean, individually and/or collectively,
the software packages comprised of the Software and Documentation listed on
Exhibit A.


1.4 The term "Territory" shall mean Japan.


1.5 The term "Person" shall mean and include any individual,
corporation, trust, estate, partnership, joint venture, company, association,
league, governmental bureau or agency, or any other entity regardless of the
type or nature thereof.


1.6 The term "Sub-Distributor" shall mean the subdistributors listed on
Exhibit A.


1.7 The term "End User" shall mean any Person who obtains copies of the
Products solely for its own internal use from a Subdistributor or dealer
network established in the territory.


1.8 The term "MetaCreations Standard End-User License Agreement" shall
mean the written license between MetaCreations and an End User pursuant to
which the End User obtains the limited right to use the Products attached
hereto as Exhibit C.


1.9 The term "Confidential Information" shall mean all data and
information of a confidential nature, including know-how and trade secrets,
relating to the business, the affairs, the Products, the development projects
or other products or services of MetaCreations. Confidential Information may
be


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communicated in writing or in any other recorded or tangible form. Data and
information shall be considered to be Confidential Information (1) if
MetaCreations has marked them as such, (2) if MetaCreations has advised
Distributor of their confidential nature in writing, or (3) if, due to their
character or nature, a reasonable person in a like position and under like
circumstances as Distributor would treat them as secret and confidential.
"Confidential Information" shall also mean all data and information of a
confidential nature and expressly marked "Confidential" provided by
Distributor to MetaCreations.


1.10 The term "Intellectual Property Rights" shall mean and include all
patents, copyrights, trademarks, trade secrets, trade names and other
proprietary rights or applications therefor which MetaCreations may at any
time own, adopt, use, or register with respect to the Products or its
business.


1.11 The term "Technical Assistance" shall mean and include advice,
training, information and other support regarding the selection,
installation, maintenance, and application of the Products.


1.12 The term "Distributor Discount" shall mean the percentage
discounted from the Suggested Japanese List Price for the Products set forth
in Exhibit A1 attached hereto.


1.13 The term "Purchase Price" shall mean the price in US dollars at
which Distributor will buy products from MetaCreations calculated by
subtracting the Distributor Discount from the Suggested Japanese List Price.
The Purchase Prices are listed on Exhbiti A1.


2. GRANT OF LIMITED DISTRIBUTION RIGHTS


2.1 Grant. Subject to the terms and conditions set forth in this
Agreement, MetaCreations hereby grants to Distributor and Distributor hereby
accepts from MetaCreations, a non-transferable right to distribute the
Products solely to Sub Distributors. This right shall be exclusive in the
Territory for Japanese and English language Products and non-exclusive
outside of the Territory for Japanese language Products. The Distributor
agrees that it will not distribute English language Products outside the
Territory. Furthermore, Distributor will not distribute directly to dealers
or End Users but will distribute solely to Sub Distributors which will
further distribute to dealers and End Users located in the Territory.
Distributor will distribute Products to Sub Distributors on a product
specific basis as defined in Exhibit A. MetaCreations hereby further grants
Distributor the right to use the Products, the Confidential Information and
MetaCreations' trademarks and tradenames, solely in connection with andsolely
to the extent reasonably necessary for, the marketing, distribution, and
support of the Products within the Territory.


2.2 Exclusivity. The exclusive rights granted herein are subject to
Distributor meeting the exclusivity targets defined in Exhibit B.
MetaCreations retains the right to market the Products, through OEM or bundle
arrangements, in the Territory to or through any third party or entity
conjunction with the Software Publishing OEM Agreement signed between the
parties on August 1st, 1997. In such instances the parties recognize the need
for distribution to supply marketing and/or support to third party companies
and/or end users of these OEM or bundled products. Distributor agrees to
provide such services in good faith and in exchange for these marketing
and/or support activities MetaCreations agrees to pay to Distributor an
amount equal to [**]% of MetaCreations net revenues derived from the
distribution of the Products in any OEM or bundle arrangements in Japan. In
addition, MetaCreations shall be responsible for all marketing and
development related expenses incurred by Distributor in the direct
fulfillment of such OEM contracts. The payment terms of such fees shall be
determined on a case by case basis reflecting the terms in which
MetaCreations receives such funds from the respective OEM or bundle partner.


[*] Confidential treatment requested


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2.3 Relationship. The relationship of MetaCreations and Distributor
established by this Agreement is of independent contractors, and nothing in
this Agreement shall be construed: (1) to give either party the power to
direct or control the daily activities of the other party, or (2) to
constitute the parties as principal and agent, employer and employee,
partners, joint ventures, co-owners or otherwise as participants in a joint
undertaking. MetaCreations and Distributor understand and agree that, except
as specifically provided for in this Agreement, MetaCreations does not grant
Distributor the power or authority to make or give any agreement, statement,
representation, warranty or other commitment on behalf of MetaCreations, or
to enter into any contract or otherwise incur any liability or obligation,
express or implied, on behalf of MetaCreations, or to transfer, release or
waive any right, title or interest of MetaCreations.


2.4 Reserved Rights. All rights not specifically granted to Distributor
hereunder are reserved by MetaCreations. Distributor shall have no right
whatsoever to utilize, receive, review, or otherwise have access to the
source code for Products distributed by MetaCreations in object code form
only, unless MetaCreations expressly grants such right in writing, if
MetaCreations, in its sole discretion, deems such access necessary for the
proper marketing, sale , support or service of the Products.


2.5 Changes in Products and Support. MetaCreations reserves the right at
any time with sixty (60) days written notice to (i) determine what
constitutes each Product, including, but not limited to its features,
characteristics, documentation, and related materials; (ii) discontinue its
distribution of any or all Products or discontinue distribution of any
Product to the retail channel in the event that MetaCreations determines that
further manufacturing and distribution of the product would be financially
harmful; (iii) change or terminate any of the features of the English
language Product, or (iv) change or terminate the level or type or support or
service which MetaCreations makes available for the English language Product.
In the event that MetaCreations discontinues the distribution of any of the
Products in conjunction with this subsection, Distributor shall use
commercially reasonable efforts to sell out its current inventory of said
Product; provided, however that any units of the Product remaining unsold may
be returned or destroyed for full credit of the original purchase price.


3. OBLIGATIONS OF METACREATIONS


3.1 Material. MetaCreations shall provide Distributor with the following
materials:


3.1.1 Three (3) copies of each Product for internal use, sales
demonstrations and training purposes; if any new Products are in short
supply, MetaCreations shall provide such versions as soon as economically
practicable for MetaCreations. The use of such Products shall be in
accordance with MetaCreations' Standard End User License Agreement.


3.1.2 A reasonable number of marked samples and evaluation
versions, if any, of the Products for distribution to journalists for product
reviews and to major prospective customers deemed strategic to Distributor's
success. Distributor shall promptly provide MetaCreations with the names and
addresses of the recipients of such samples and evaluation versions.


3.1.3 A reasonable number of copies of all English language
marketing and promotional materials that MetaCreations, at its sole
discretion, may prepare and distribute with respect to the Products.


3.2 Technical Assistance. MetaCreations shall provide to a designated
technical liaison person of Distributor a reasonable amount of Technical
Assistance (via telephone, fax or other electronic means), including support
materials and technical information at those levels reasonably necessary for
the Distributor to meet the needs of End Users in the Territory. Such support
shall be free of charge, except Distributor shall be responsible for paying
all applicable telephone toll charges on calls made to


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MetaCreations. MetaCreations shall promptly notify Distributor upon detection
of any defects or programming errors in the Products. MetaCreations will
consult with the Distributor and then, in its sole discretion, determine if
it is necessary to revise the Product code to remedy the programming error.


3.3 New Releases. All new Japanese and English language Products
released by MetaCreations during the term of this Agreement shall be
automatically added to the Products covered by this Agreement with the
exception of new versions of Infini-D, TextureScape, LogoMotion, and Collage
which are currently covered under a separate distribution agreement. Upon
release of a new version of an existing Product, for a period of one-hundred
twenty (120) days from release of the new version, Distributor shall have the
right to return to MetaCreations the units of the previous version in
inventory and receive credit for the amount paid for such units. At
MetaCreations sole discretion, a certificate of disposal may be sent in lieu
of the actual units of the product.


4. MARKETING AND SUPPORT OBLIGATIONS OF DISTRIBUTOR


4.1 Efforts. Distributor agrees that during the term of this Agreement
it shall use its best efforts to promote vigorously and aggressively the
marketing and distribution of the Products within the Territory, including
but not limited to advertising the Products in appropriate media,
implementing MetaCreations' marketing campaigns, and participating in trade
shows, conferences, expositions, and promotional seminars, all with due
consideration for the local marketing environment in the Territory.
Distributor shall be responsible for all expenses incurred in promoting,
marketing and distributing the Products within the Territory. However
MetaCreations agrees to pay to Distributor certain Marketing Development
Funds ("MDF") as outlined on Exhibit A1. Distributor shall conduct its
marketing activities in a lawful manner with the highest standards of fair
trade, fair competition, and business ethics, and shall cause its employees
to do the same. Distributor shall use its best efforts to utilize all
promotional materials supplied by MetaCreations. MetaCreations may, but is
under no obligation to, engage in additional public relations activities
which will be coordinated with efforts of the Distributor.


4.2 Policies. Distributor shall use commercially reasonable efforts to
adhere to the policies set by MetaCreations from time to time for the
marketing of the Products; provided, however, that Distributor shall be free
in establishing the resale prices charged for the Products and, subject to
Section 4.8 of this Agreement, the terms and conditions of distribution.
Attached to this Agreement as Exhibit A is the list of MetaCreations's
Suggested Japanese List Prices for the Products within the Territory.


4.3 Stock. Distributor shall use commercially reasonable efforts to
cause Sub-Distributors to at all times maintain a stock of Products which is
reasonably sufficient to meet the anticipated demand therefor throughout the
Territory. Distributor shall not distribute any component of the Products
separately from the other Product components, apart from the routine exchange
or replacement of defective Product components. Distributor may balance its
stock up to [**] percent ([**]%) of the prior quarters purchases. All
shipping costs, duties and taxes with regards to such replacement shall be
paid by Distributor.


4.4 Offices. Distributor shall use commercially reasonable efforts to
cause each Sub-Distributor to maintain offices within the Territory adequate
to market and support the Products in the Territory. Distributor shall
further use commercially reasonable efforts to cause Sub-Distributors to
retain and have at its disposal at all times in each country within the
Territory an adequate staff of trained and qualified personnel (including at
least one (1) full-time product manager dedicated to the Products, two (2)
software sales persons, and two (2) technical support persons) to perform its
obligations under this Agreement.


[*] Confidential treatment requested


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4.5 Sub-Distributors. Distributor shall use commercially reasonable
efforts to establish an efficient network of Sub-Distributors in order to
optimize the distribution of the Products in the Territory; provided that
Distributor shall not directly employ or utilize any sub-distributor, or
should any sub distributor directly employ a dealer without first having
entered into, with such sub-distributor or dealer, a written agreement which
is as protective of MetaCreations's Intellectual Property Rights and
Confidential Information as this Agreement.


4.6 Marketing Materials. Distributor shall use commercially reasonable
cause Sub-Distributors to prepare Product descriptions, promotional and
marketing and such other materials, including translations of the English, or
other language, promotional materials supplied by MetaCreations in accordance
with Section 3.1.3 of this Agreement, as are reasonable and appropriate for
the successful marketing of the Products in the Territory; provided, however,
that Distributor shall provide MetaCreations with copies of all such
materials prior to their release and shall not distribute them without
MetaCreations's prior written approval and provided that the expenses for
such materials shall be paid for by Distributor or by the MDF funds provided
for by this Agreement unless otherwise agreed upon by the parties.


4.7 Marks. Distributor agrees to maintain and respect the trademark and
trade name of the Products in identifying, advertising and marketing the
Products. Distributor agrees to use the appropriate notation for registered
or other trademarks.


4.8 Packages. Distributor shall distribute the Products only as part of
a sealed software package including a MetaCreations Standard End-User License
Agreement.


4.9 Sales and Support. Distributor agrees to use its best efforts to
cause Sub-Distributors to set up at its offices at least one telephone
support line dedicated to the support of the Products, and Distributor will
publish the phone number of such support line on Product packaging and in
advertising, as post sales and support services for the Products distributed
by Distributor. Technical support should be commercially reasonable for the
market and made available during the standard work week.


4.10 Guarantees. Distributor agrees to purchase a minimum amount of
product from MetaCreations during each quarter throughout the term of this
Agreement. The minimum purchase amount for each quarter shall be [**]% of the
exclusivity target for that respective quarter as outlined in Exhibit B. In
the event that Distributor's orders during any calendar quarter do not equal
the minimum purchase amount for that quarter the difference between the
minimum purchase amount and the actual purchase amount shall become payable
within 30 days from the last day of such quarter.


5. ASSISTANCE TO METACREATIONS


5.1 Rules and Regulations. Distributor shall use commercially reasonable
efforts to advise MetaCreations of any legislation, rule, regulation or other
law (including but not limited to any customs, tax, trade, intellectual
property, or tariff law) which, to the Distributors best knowledge, is in
effect or which may come into effect in the Territory or parts thereof after
the date of this Agreement and which affects the importation of the Products
into, or the use and the protection of the Products and the Intellectual
Property Rights therein within, the Territory, or which has a material affect
on any provision of this Agreement.


[*] Confidential treatment requested


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5.2 Errors. Distributor shall promptly prepare and forward to
MetaCreations a list of all errors in the Products of which it becomes aware
or of which it receives notification. In the event that Distributor receives
notification of any major problem with the Products, it shall immediately
notify MetaCreations by telephone and fax. The list of errors provided to
MetaCreations shall indicate a priority of the problems to be resolved and,
as best as possible, the circumstances under which such errors occur. Where
such errors have been noted to MetaCreations, MetaCreations shall offer such
assistance as is necessary for the Distributor to provide customer service of
the Products. MetaCreations's assistance shall include bug fixing,
modification of the manuals, if required, and personnel training for the
Distributor. The ultimate determination of a bug and modification of the
manuals and a resolution shall be determined solely by MetaCreations in
consultation with the Distributor.


5.3 Customer Information. Distributor agrees to make commercially
reasonable efforts to provide MetaCreations with such additional information
pertaining to potential End Users, products and activities of competitors and
market reactions as MetaCreations may reasonably request from time to time.


6. INSPECTION, RECORDS AND REPORTING


6.1 Reports. Distributor shall provide MetaCreations with monthly
operations reports of Distributor's activities in marketing the Products in
the Territory. Each such report shall be due within thirty (30) days after
the end of the month to which it relates and shall include, among other
things:


6.1.1 A summary of all of the Distributor's marketing activities
with respect to the Products.


6.1.2 Upon MetaCreations's request, a summary of competitor's
product introductions and activities in the Territory.


6.1.3 A sell-through report which details the number of Products
shipped from Distributor's warehouse to sub-distributors and or resellers, on
a monthly basis.


6.1.4 Upon the reasonable request of MetaCreations, any
additional information concerning the distribution of Products within the
Territory.


6.2 Registered Users. MetaCreations agrees to place a user registration
card for the respective Sub-Distributor into each unit of the Product
manufactured by MetaCreations. Distributor shall use commercially reasonable
efforts to cause Sub-Distributors to collect such cards from users and
register them in a reasonable electronic format. Distributor further agrees
that these register user databases are the exclusive property of
MetaCreations and that copies of such data shall be provided to MetaCreations
upon thrity (30) days of written request.


6.3 Inventory. By the tenth (10th) day of each month during the term of
this Agreement, Distributor shall provide MetaCreations with and inventory
on-hand report for the previous month, broken down by product SKU.


6.4 Forecast. By the tenth (10th) day of each new month during the term
of thi ...