ADD ON CONTENT ADDENDUM TO CONFIDENTIAL LICENSE AGREEMENT FOR THE WII CONSOLE
Exhibit 10.3
THIS ADD ON CONTENT ADDENDUM (“Addendum”) to the CONFIDENTIAL LICENSE AGREEMENT FOR THE WII
CONSOLE (“Agreement”) is entered into between Nintendo of America Inc. (“NOA”) and MAJESCO
ENTERTAINMENT COMPANY (“LICENSEE”), and shall be deemed a part of the Agreement. NOA and LICENSEE
agree as follows:
1. BACKGROUND
1.1 The parties previously entered into the Agreement, which Agreement, among other things,
restricts LICENSEE from developing additional content for Games for download by consumers, without
the express written approval of NOA.
1.2 NOA now desires to offer LICENSEE the opportunity to create additional new content for
Games for download by customers through NOA’s Wii Network Services.
1.3 LICENSEE desires to develop additional new content for Games, and have NOA offer that new
content to customers for download through the Wii Network Services.
1.4 NOA desires to market, distribute and sell additional new content for Games through the
Wii Network Services.
2. DEFINITIONS
All capitalized terms used in this Addendum that are not otherwise defined herein shall have
the meaning set forth in the Agreement. The following additional definitions specifically apply to
this Addendum:
2.1 “Add On Content” means any new content for Games developed by or for LICENSEE and
Distributed by NOA. “Add On Content” shall be deemed a part of a Game, as defined in the
Agreement.
2.2 “Add On Content Final Title Sheet” means NOA’s form that is completed and submitted by
LICENSEE with each proposed Add On Content.
2.3 “Distribute”, “Distributed” or “Distribution” means any offer of Add On Content to a
customer by NOA through the Wii Network Services.
2.4 “E-Commerce Library Programming Guidelines for Wii” means the current guidelines specific
to the incorporation of e-commerce functionality in Games to allow for the Sale, Distribution, and
download of Add On Content. The E-commerce Guidelines shall be deemed a part of the Guidelines, as
defined in the Agreement.
2.5 “Instruction Manuals” means electronic manuals or other documents, in such form as may be
required by NOA, that describe how to use Add On Content and that set forth any necessary warnings
related to such use.
2.6 “Licensee Intellectual Property Rights” means Proprietary Rights owned or licensed by
LICENSEE (excluding any Intellectual Property Rights) in or relating to the Game or Add On Content.
2.7 “Performance Threshold” means, for each specific piece of Add On Content, the minimum
number of Sales or other criteria required to be satisfied for specific Add On Content before
LICENSEE will be eligible to be paid a Royalty for that Add On Content.
2.8 “Royalty” or “Royalties” means the amounts payable to LICENSEE by NOA in accordance with
this Addendum.
2.9 “Sale” means each redemption by a customer of Wii Points (or the actual purchase price to
download content, should NOA allow purchases by other than Wii Points), which enables such customer
to download specific Add On Content (collectively, “Sales”). “Sell” or “Sold” shall mean the
completion of each such Sale through NOA.
2.10 “System Updates” mean upgrades, bug fixes, or additional features that modify the
operating system of the Wii console and/or are designed to optimize or enhance the operation,
performance, or security of the Wii Network Services or the Wii console.
2.11 “Wii Points” means the points which customers purchase from NOA and its subsidiaries
through means such as the Wii Shop Channel and points cards sold or distributed by NOA’s
promotional partners and authorized retailers and distributors, and that may be redeemed by
customers to download Add On Content or other content.
2.12 “Wii Shop Channel” means the service provided by NOA or Nintendo that is associated with
the Wii console (or any successor consoles) whereby customers, through an Internet connection, can
download content for such console upon a Sale to a customer.
3. GRANT OF LICENSE; RESTRICTIONS
3.1 Grant of Development License to LICENSEE. Subject to the terms and conditions of
the Agreement, NOA grants to LICENSEE, during the Term and throughout the Territory, a
nonexclusive, nontransferable, limited license to use the Intellectual Property Rights to develop
Add On Content (or have Add On Content developed on LICENSEE’s behalf) for Distribution and Sale
solely by NOA.
3.2 Grant of License to NOA. Subject to the terms and conditions of the Agreement,
LICENSEE grants to NOA, during the Term and throughout the Territory, a license in and to the Add
On Content, and all of LICENSEE’s Proprietary Rights associated therewith, sufficient to permit
NOA, its subsidiaries or third parties working on NOA’s behalf, to advertise, market, Distribute
and Sell the Add On Content. NOA shall not be in breach of this license grant if it advertises,
markets, Distributes or Sells to any customer representing him or herself to be within the
Territory, even if such customer is not in fact within the Territory.
3.3 Restrictions and Prohibitions. NOA will not (i) modify, Distribute or Sell Add On
Content or all or any part of the Licensee Intellectual Property Rights, except as permitted by
this Agreement; or (ii) reverse engineer or assist in the reverse engineering of all or any part of
the Add On Content. LICENSEE will not (I) reverse engineer or assist in the reverse engineering of
all or any part of the Intellectual Property Rights; or (II) use the Intellectual Property Rights
for any purpose other than that set forth in the Agreement and in Subsection 3.1 of this Addendum,
unless expressly permitted pursuant to in accordance with a separate written authorization by NOA.
4. DEVELOPMENT; APPROVALS; UPGRADES; DISTRIBUTION; SUPPORT
4.1 Responsibility for Add On Content. LICENSEE is solely responsible for
development, testing, quality, content, operation and support of Add On Content, and must comply
with any Guidelines made available to LICENSEE by NOA in connection therewith. Failure to comply
with any Guidelines shall be a breach of this Agreement. LICENSEE shall review all Add On Content
prior to submission to NOA, and shall ensure that all Add On Content submitted to NOA by LICENSEE
for Distribution: (i) is free of bugs or other operational defects or errors that have a material
adverse effect on the use and/or
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enjoyment of the applicable Game, (ii) does not contain any open source software, and (iii) does
not include material that would change the existing ESRB rating or descriptors for the Game. To
the extent an Instruction Manual is required by the Guidelines, LICENSEE must include an
Instruction Manual with its submission.
4.2 Security Technology, System Updates and Notifications. In its sole discretion,
and without Notice to LICENSEE, NOA or Nintendo may add Security Technology, System Updates, and
trademark, copyright or customer notifications to Add On Content or Instruction Manuals; provided,
however, any such addition by NOA will not serve to release LICENSEE from any obligation under the
Agreement or under applicable laws, rules or regulations. NOA may in addition require LICENSEE at
LICENSEE’s sole expense to update its Add On Content from time to time to (i) comply with any new
Wii Network Services or Wii console requirements or Guidelines, or (ii) fix bugs or other
operational defects or errors in the Add On Content.
4.3 Submission of Completed Add On Content. When development and testing of proposed
Add On Content has been completed, LICENSEE will submit such proposed Add On Content to NOA for
approval, and shall provide along with each submission a completed Add On Content Final Title Sheet
for such proposed Add On Content, and such additional information or documentation as deemed
necessary by NOA.
4.4 No Obligation to Market, Distribute or Sell. LICENSEE acknowledges that its
development of proposed Add On Content is at its sole risk. NOA is under no obligation to
advertise, market, Distribute or Sell specific Add On Content and thereby incur any Royalty or
other financial obligation to LICENSEE. If NOA elects to Distribute any Add On Content, the
commencement date of such Distribution, the length of time, and the countries within the Territory
in which it is Distributed, shall be in NOA’s sole discretion, provided, however, LICENSEE may
terminate NOA’s right to Distribute or Sell specific Add On Content, upon thirty day’s prior Notice
to NOA. NOA may at any time and for any reason (i) remove Add On Content from the Wii Network
Services for all or a portion of the Territory without liability to LICENSEE, other than payment of
any Royalties that may be due under Section 5 of this Addendum for Sales that occurred prior to
such removal, and (ii) restore Add On Content to the Wii Network Services for all or a portion of
the Territory during the Term (and in such case shall continue to pay to LICENSEE any Royalties due
under Section 5 of this Addendum).
4.5 Technical Support. LICENSEE shall provide all necessary technical support to NOA
relating to the Add On Content in order to enable NOA to market, Distribute and Sell Add On
Content.
4.6 Customer Support. LICENSEE is solely responsible for all customer support for the
Add On Content. Notwithstanding the foregoing, LICENSEE acknowledges that NOA shall have the right
to post Instruction Manuals and other information relating to Add On Content on NOA websites for
customer support purposes.
5. PRICE; ROYALTIES
5.1 Price. NOA shall have sole discretion to (i) determine the number of Wii Points a
customer must redeem to download specific Add On Content (or the purchase price, if Wii Points are
not used); (ii) change the number of Wii Points or the purchase price from time to time; and (iii)
require a different number of Wii Points or purchase price in order to redeem specific Add On
Content in different countries within the Territory. LICENSEE may suggest to NOA the number of Wii
Points (or the purchase price, if Wii Points are not used) at which to offer Add On Content,
although NOA has no obligation to accept such suggestion. If LICENSEE has suggested a price of 0
Wii Points, and NOA does set a price of 0 Wii Points, LICENSEE acknowledges and agrees that it will
reimburse NOA at NOA’s request for any costs or taxes associated with no cost access to such Add On
Content.
5.2 Royalty. Subject to this Section 5, and provided the applicable Performance
Threshold has been met for such Add On Content, NOA will pay LICENSEE a Royalty on each Sale as
follows:
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5.2.1 At the end of each calendar quarter, NOA will determine the total number of Sales of
each Add On Content.
5.2.2 NOA will then determine the total number of Wii Points redeemed by customers with
respect to such Sales (or the total purchase price for such Sales, if Wii Points are not used).
5.2.3 NOA will then calculate for each Sale the total “imputed value” of such Wii Points,
using the following fixed conversion rate: 1 point = 0.01 U.S. Dollars (or the actual purchase
price, if Wii Points are not used).
5.2.4 The “imputed value” or actual purchase price will then be reduced by any deductions for
Royalty offsets pursuant to Subsection 5.6 of this Addendum (“Quarterly Amount”).
5.2.5 NOA will pay LICENSEE a Royalty corresponding to sixty-five percent (0.65) of the
Quarterly Amount, less any deductions for any required withholding taxes.
5.3 Performance Thresholds. In order to help offset NOA’s expenses incurred for
quality assurance, lot check, Distribution, and Sales, NOA’s payments to LICENSEE for each specific
Add On Content Distributed by NOA shall not begin unless and until LICENSEE meets the applicable
Performance Threshold for that specific Add On Content.
5.3.2 Applicable Performance Thresholds are set forth at ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇ or such other
website as NOA may in the future designate. NOA may from time to time in its sole discretion
modify Performance Thresholds or add new Performance Thresholds, provided that NOA may not increase
any Performance Threshold for specific Add On Content after the date such Add On Content is
initially Distributed.
5.3.3 Once specific Add On Content has reached the applicable Performance Threshold, Royalties
will be due for all Sales of such Add On Content (including all Sales made prior to reaching the
applicable Performance Threshold), and will be paid as provided in Subsection 5.4 of this Addendum,
without payment of interest. In the event the Agreement or NOA’s right to distribute specific Add
On Content terminates before the applicable Performance Threshold has been met for such Add On
Content, no payment for such Sales will be owed to LICENSEE.
5.4 Payments. All Royalty payments from NOA to LICENSEE shall be made by check or by
electronic transfer, or such other means as may be required by NOA from time to time, to the
account listed in the Add On Content Final Title Sheet for the initial Add On Content Distributed
by NOA, or such other account as LICENSEE may thereafter designate in a Notice to NOA. LICENSEE
may not offset against any amount owed NOA any amounts payable pursuant to this Addendum.
5.5 Withholding Taxes. LICENSEE acknowledges that Royalty payments made to non-U.S.
content providers may be subject to government-imposed withholding or other taxes. NOA will
withhold and pay such taxes on Royalty payments made by NOA under this Agreement unless LICENSEE
completes and submits to NOA all tax documents required to eliminate or reduce such taxes in
accordance with applicable tax treaties. LICENSEE acknowledges that, in order to eliminate or
reduce applicable taxes, such documents must be received by NOA (Attn. Nintendo of America Inc. Tax
Department, 4820 — 150th Ave. NE, Redmond, WA 98052) prior to NOA making a Royalty
payment hereunder, and if not received by the time a Royalty payment is otherwise due, such Royalty
payment will be subject to withholding of such taxes. In the event taxes are withheld, NOA will
provide LICENSEE copies of relevant tax documents evidencing withholding of such taxes.
5.6 Royalty Offsets.
5.6.1 Refunds. NOA shall have the right in its sole discretion to refund Wii Points
to customers in respect of any Sale in the event of a customer complaint or unauthorized
transaction relating to such
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Sale, and to offset the corresponding value of such refund amounts against any Royalties that would
otherwise be due hereunder.
5.6.2 Other. NOA may offset against Royalties any amounts which LICENSEE is required
to pay NOA under the Agreement.
5.7 Claims. Without prejudice to any other rights and remedies of NOA, in the event
any Claim is made that may be subject to LICENSEE’s indemnification obligations under Section 10 of
the Agreement, NOA may in its sole discretion withhold payment to LICENSEE until such time as the
Claim has been resolved, and any amounts due NOA have been fully paid or any Royalty offsets
relating to such amounts have been fully determined.
5.8 Royalty Reports. NOA will furnish LICENSEE with quarterly Royalty reports for any
calendar quarter in which Sales took place, and, provided the applicable Performance Threshold has
been met, will pay any Royalties due within thirty (30) days of the close of such calendar quarter,
provided, however, if any payment due is less than $100 USD, NOA may in its sole discretion delay
making such payment until the earlier of the calendar quarter immediately following: (i) that
calendar quarter in which Royalties equal that amount or greater, or (ii) the expiration of the
Term.
6. MARKETING, ADVERTISING, AND CUSTOMER SUPPORT
6.1 Marketing.
6.1.1 By NOA. NOA may in its sole discretion and at its expense (i) advertise or list
Add On Content on websites operated by or on behalf of NOA, on the Wii Network Services, and in
other online, media or print marketing channels, and (ii) include trailers, screen shots, artwork,
sound effects, and other information relating to the Add On Content in NOA periodicals (issued by
NOA or through its licensees), Wii channels, and other advertising, promotional or marketing
materials that promote Add On Content, the Wii Network Services, or other NOA products, services or
programs. NOA shall submit to LICENSEE samples of proposed marketing materials for LICENSEE’s
review and approval. LICENSEE shall within five (5) business days of receipt approve or disapprove
of such samples. NOA shall not use any marketing materials without obtaining LICENSEE’s approval,
which approval shall not be unreasonably withheld. NOA may from time to time reasonably request,
and LICENSEE shall provide to NOA at LICENSEE’s expense, reference materials such as character
print samples and other materials in connection with these advertising and promotional activities.
6.1.2 By LICENSEE. Subject to Subsection 7.1 of the Agreement, LICENSEE may in its
sole discretion and at its expense advertise and market Add On Content.
6.2 Royalty-Free Copies. NOA shall be provided 50 complimentary downloads of Add On
Content, which may be used by its employees or media for evaluation purposes, without any payment
of Royalties or other amounts to LICENSEE.
7. ADDITIONAL REPRESENTATIONS, WARRANTIES AND DISCLAIMERS
7.1 LICENSEE’s Representations and Warranties. LICENSEE represents and warrants that,
except for any Intellectual Property Rights, System Updates or notifications included by NOA or
Nintendo in the Add On Content: (i) LICENSEE is either the sole owner of all right, title and
interest in and to the Add On Content or Marketing Materials (including but not limited to any
music, trademarks, service marks or other Proprietary Rights contained in or relating to the Add On
Content), or has at LICENSEE’s expense obtained all necessary third party approvals in writing
(including but not limited to those of any music performance or collecting licensing societies), to
grant to NOA the rights set forth in this Addendum throughout the Territory and for the duration of
the Term; (ii) neither the Add On Content nor the Licensee Intellectual Property Rights violate or
infringe any Proprietary Rights of any third party anywhere in the Territory; (iii) the Add On
Content will at the time delivered to NOA be free of any bugs or other operational defects or
errors that materially affect Game play; (iv) nothing in the Add On Content would
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change the original ESRB rating or descriptors for the Game; (v) the Add On Content does not
contain any material that is libelous or defamatory or that discloses private or personal matters
concerning any person, or any computer virus, trojan horse, spyware or other contaminating,
malicious or destructive feature; (vi) the Add On Content does not contain any open source
software; and (vii) the Add On Content conforms with the requirements of the Agreement, including
but not limited to the Guidelines, and all applicable laws, rules and regulations.
7.2 NOA’s Disclaimers. TO THE MAXIMUM EXTENT PERMITTED BY LAW, NOA (ON BEHALF OF
ITSELF, NINTENDO, AND THEIR AFFILIATES, LICENSORS, SUPPLIERS AND SUBCONTRACTORS) EXPRESSLY
DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT TO THE ADD ON CONTENT OR THE WII NETWORK SERVICE,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A GENERAL OR PARTICULAR PURPOSE. LICENSEE ACKNOWLEDGES THAT THE ADD ON CONTENT AND THE WII
NETWORK SERVICE MAY BE SUBJECT TO DISRUPTIONS, AND THAT NOA MAY DECIDE TO DISCONTINUE OR TERMINATE
ALL OR PART OF THE WII NETWORK SERVICE, INCLUDING BUT NOT LIMITED TO THE WII SHOP CHANNEL, AT ANY
TIME IN NOA’S SOLE DISCRETION AND WITHOUT NOTICE TO LICENSEE.
7.3 INTELLECTUAL PROPERTY RIGHTS DISCLAIMER. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
NOA (ON BEHALF OF ITSELF, NINTENDO, AND THEIR AFFILIATES, LICENSORS, SUPPLIERS AND SUBCONTRACTORS)
EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES CONCERNING THE SCOPE OR VALIDITY OF THE
INTELLECTUAL PROPERTY RIGHTS, AND EXPRESSLY DISCLAIMS ANY WARRANTY THAT THE DESIGN OR DEVELOPMENT
OF THE ADD ON CONTENT OR THE USE OF THE INTELLECTUAL PROPERTY RIGHTS BY LICENSEE WILL NOT INFRINGE
UPON ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHTS OF A THIRD PARTY. ANY WARRANTY
THAT MAY BE PROVIDED IN ANY APPLICABLE PROVISION OF THE UNIFORM COMMERCIAL CODE OR ANY OTHER
COMPARABLE LAW, STATUTE OR REGULATION GOVERNING COMMERCIAL ACTIVITY IS EXPRESSLY DISCLAIMED.
LICENSEE HEREBY ASSUMES THE RISK OF INFRINGEMENT.
7.4 The representations and warranties and disclaimers set forth in Subsections 7.1, 7.2 and
7.3 of this Addendum shall apply with respect to Add On Content and not those representations,
warranties and disclaimers set forth in Subsections 9.1(c), 9.3 and 9.4 of the Agreement.
8. INDEMNIFICATION
All of the provisions set forth at Section 10 of the Agreement shall apply equally to Add On
Content, including LICENSEE’s indemnification obligations set forth at Subsection 10.2; provided,
however, that LICENSEE’S indemnification obligations shall not apply to the extent a Claim is
related solely to advertising, marketing, Distribution or sales activities performed by NOA and not
by LICENSEE.
9. TERM AND TERMINATION
9.1 Term of Addendum. This Addendum will commence on the earlier of the date last
signed by a party, or the date LICENSEE’s first Add On Content is Distributed, and will continue
for so long as the Agreement is in effect. LICENSEE acknowledges that Add On Content Sold at any
time during the Term shall remain playable and may be re-downloaded by customers for as long as
they have their Wii console, even if the Agreement has expired or been terminated, or NOA’s right
to Distribute that specific Add On Content has been terminated pursuant to Subsection 4.4 of this
Addendum. NOA, may not, however, Distribute or Sell any Add On Content after the Agreement has
expired or been terminated.
9.2 Termination of Add On Content. If LICENSEE terminates NOA’s right to Distribute
specific Add On Content pursuant to Subsection 4.4 of this Addendum, such termination shall only
terminate NOA’s right to Distribute that specific Add On Content and shall not affect any right
that
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LICENSEE has granted to Distribute any other Add On Content or this Addendum, which shall continue
in full force and effect.
9.3 Survival. Upon the expiration or termination of this Addendum, provisions that by
their nature are intended to survive such expiration or termination shall so survive, including,
without limitation: Sections 2, 5, 7, 8 and 10 of this Addendum in their entirety, and Subsections
3.3, 4.1, 4.2, 9.1, and 9.3 of this Addendum.
10. GENERAL PROVISIONS
10.1 References to “Licensed Products”. The parties agree that the provisions related
to Licensed Products set forth in the Agreement at Subsections 2.11, 2.13, 2.23, 3.2, 4.2, 7.3,
7.4(c), 7.6, and 7.7, and Section 11 shall apply equally to Add On Content, and not just to the
Licensed Products, and that every reference to “Licensed Products” therein shall be deemed to
include Add On Content.
10.2 Confidential License Agreement for the Wii Console. This Addendum shall be
deemed to be a part of the Agreement and, except as expressly modified by this Addendum, all of the
terms and conditions of the Agreement shall apply to this Addendum.
10.3 Application of Other Agreements. In the event LICENSEE has entered into a
WiiWare Content Development and Distribution Agreement with NOA, the terms of this Addendum shall
apply with respect to Add On Content for Game discs, and the terms of the WiiWare Content
Development and Distribution Agreement shall apply with respect to Add On Content for WiiWare
games.
| NOA: | LICENSEE: | |||||||||||
| NINTENDO OF AMERICA INC. | MAJESCO ENTERTAINMENT COMPANY | |||||||||||
By:
|
By: | |||||||||||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | Name: | ||||||||||
| Title: | Executive VP, Administration | Title: | ||||||||||
| Date: | Date: | |||||||||||
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