Exhibit 10.14
LICENSE AND REVENUE SHARING AGREEMENT
This non-exclusive License and Revenue Sharing Agreement ("Agreement") is
entered into and effective as of January 1, 2003, ("Effective Date") by and
between DWANGO North America, Inc., a corporation duly established and existing
under the laws of the State of Texas, with a principal place of business at 0000
Xxx Xxxxxx Xx., Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 ("DWANGO") and NEC
America, Inc., a corporation duly established and existing under the laws of the
State of New York, with a principal place of business at 0000 Xxxxx Xxxxxxx 000,
Xxxxxx, Xxxxx 00000 ("NEC").
WITNESSETH:
WHEREAS, DWANGO has licensed the rights to a certain wireless game ("Star
Diversion") for commercial use within the United States, Canada and Mexico;
WHEREAS, NEC intends to manufacture or have manufactured on its behalf a
wireless handset model ("NEC M515" and/or "NEC 515", hereinafter collectively
the "NEC 515 Handset"), which supports DoCoMo Java Version 1.5 ("DOJA");
WHEREAS DWANGO and NEC (hereinafter collectively the "Parties" and each a
"Party") want to have Star Diversion available for use on the NEC 515 Handset in
the United States, Canada and Mexico by the end of the second calendar quarter
of 2003;
WHEREAS, DWANGO is willing to license Star Diversion for inclusion and use
on the NEC 515 Handset; to license Star Diversion exclusively to NEC for a
limited period as set forth herein; and to provide NEC a portion of the revenues
arising out of the use of Star Diversion as provided herein; and,
WHEREAS, NEC intends to preload an acceptable trial version of Star
Diversion on all NEC 515 Handsets that NEC distributes commercially and to
provide certain marketing and public relations support for Star Diversion as
provided herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the Parties hereby agree as follows:
1. Definitions
As used in this Agreement, the Parties hereto agree the words set forth
below shall have the meanings thereby specified:
a. "Confidential Material" shall mean corporate information,
including contractual licensing arrangements, plans,
strategies, tactics, policies, resolutions, patents,
trademark and trade name applications, and any litigation or
negotiations; marketing information, including sales or
product plans, strategies, tactics, methods, customers,
prospects, or market research data; financial information,
including cost and performance data, debt arrangement,
equity structure, investors, and holdings; operational and
scientific information, product information, specifications,
functions and features and documentation for all software,
drawings and designs; and personnel information, including
personnel lists, resumes, personnel data, and performance
evaluation, as known and disclosed by one Party to another
Party. Confidential Material specifically includes all
orally disclosed confidential information, if such
information is identified as proprietary, confidential, or
private upon disclosure or is confirmed in writing to have
been confidential within thirty (30) days of the oral
disclosure.
b. "DWANGO Licensed Property" shall mean the wireless software
game entitled "Star Diversion" and all elements thereof,
including, but not limited to, the characters, images,
scenes, artwork, storyline, and events depicted therein and
the audio-visual display generated by the game, and
DWANGO(R), Star Diversion(TM), and all other trademarks and
trade names used by DWANGO in conjunction with the Star
Diversion or promotion thereof for distribution within the
United States, Mexico and Canada.
c. "Dwango Trademarks" shall mean all trademarks owned by or
licensed to DWANGO and all trade names used by DWANGO in
conjunction with Star Diversion or the promotion thereof.
d. "Intellectual Property Rights" shall mean all copyrights
(including, without limitation, the exclusive right to
reproduce, distribute copies of, display and thereupon
perform the copyrighted work and to prepare derivative
works), copyright registrations and applications, trademark
rights (including, without limitation, registrations and
applications), patent rights, including registration and
application, trade names, mask work rights, trade secrets,
moral rights, author's rights, algorithms, rights in
packaging, goodwill and other intellectual property rights,
and all divisions, continuations, reissues, renewals and
extensions thereof, regardless of whether any such rights
arise under the laws of the United States or any other
state, country or jurisdiction, and all derivative works of
any copyrighted work.
e. "NEC Marks" shall mean all NEC trademarks and trade names
used by NEC in conjunction with NEC wireless telephones or
promotion thereof.
f. "Star Diversion" shall mean the version of software game
entitled "Star Diversion" developed by and/or licensed to
DWANGO that has been customized for use of the NEC 515
handset running under the DOJA version 1.5 specification as
provided by DoCoMo.
2. NEC Licenses
DWANGO hereby grants and NEC hereby accepts, subject to the terms,
provisions and conditions hereof, a royalty free, non-exclusive,
non-transferable, license within the United States, Canada and Mexico, during
the term of this Agreement, to the DWANGO Licensed Property in accordance with
Section 4 of this Agreement. Such licenses shall terminate upon termination or
expiration of this Agreement. Any NEC use of the DWANGO trademarks shall be in
accordance with the DWANGO guidelines attached hereto regarding acceptable use
of the Dwango trademarks. DWANGO and NEC respectively reserve all rights,
including, but not limited to all Intellectual Property Rights not expressly
licensed or otherwise granted herein.
3. Projects the Parties shall Undertake Pursuant to the Agreement
a. NEC shall provide DWANGO with reasonable access to equipment,
software, and a suitable environment for developing, testing and
optimizing Star Diversion for the NEC 515 Handset.
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b. DWANGO will provide an acceptable, trial version of Star Diversion to
NEC for the commercial launch of the NEC 515 Handset ("trial
version"), which is estimated to be the second calendar quarter of
2003.
c. NEC shall have the exclusive right to offer Star Diversion on the NEC
515 Handset until October 31, 2003 ("Exclusivity Period"). At the end
of the Exclusivity Period, DWANGO shall have the right to offer Star
Diversion in any manner that DWANGO may choose.
d. NEC shall preload the trial version of Star Diversion on all NEC 515
Handsets distributed by or through NEC in the United States, Canada
and/or Mexico. However, if NEC receives an unsolicited request from
AT&T Wireless or another similar carrier requesting that NEC not
preload Star Diversion on NEC 515 Handsets to be used by that
carrier's customers, then NEC may choose to cease preloading Star
Diversion on those handsets.
e. Upon distribution of NEC 515 Handsets preloaded with the trial version
of Star Diversion, NEC shall place a link to DWANGO's website on the
NEC promotional website.
f. Upon distribution of NEC 515 Handsets preloaded with the trial version
of Star Diversion, NEC shall promote Star Diversion. As part of its
promotional effort, all advertisements and other promotions produced
solely by NEC for the NEC 515 Handset that include an image or images
of wireless games shall include an image or images of Star Diversion.
As used herein, NEC's promotional effort shall not include any NEC 515
Handset manuals, specification sheets, packaging, collateral materials
or other similar materials. In addition, if NEC receives an
unsolicited request from AT&T Wireless or another similar carrier
asking that NEC promote or advertise a wireless game other than Star
Diversion and NEC cannot comply with such request and this Subsection
(f), then the carrier request shall take precedence and this
Subsection (f) shall not apply.
g. Each Party shall mutually work on appropriate public relations efforts
for Star Diversion ("Joint PR Effort"). As part of this Joint PR
Effort, the Parties shall begin planning a potential strategy at least
thirty (30) days prior to the distribution of NEC 515 Handsets
preloaded with the trial version of Star Diversion.
h. DWANGO may only use NEC Marks upon the prior written consent of NEC.
In addition, any DWANGO use of NEC Marks shall be in accordance with
the NEC guidelines regarding acceptable use of NEC Marks attached
hereto. Subject to the provisions of this paragraph, NEC acknowledges
that DWANGO may use the NEC Marks in conjunction with its own
promotional efforts.
i. DWANGO shall comply with all requirements of AT&T Wireless and
affiliates thereof necessary to allow NEC to exercise its rights as
outlined herein and/or necessary for DWANGO to fulfill any of its
obligations or perform any of its services as outlined herein.
j. After DWANGO has completed the development, testing and optimizing
work on Star Diversion for the NEC 515 Handset as called for in
subsection a. above, Star Diversion shall be free from material
defects and shall operate in accordance with the specification. In the
event that a problem arises with the performance of Star Diversion,
NEC shall provide DWANGO written Notice of such problem. Within 10
business days after receipt of such Notice, DWANGO shall remedy the
problem such that Star Diversion operates in accordance with the
specification. In the event that the performance problem
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is the result of an action by a party other than DWANGO (i.e., a
change in the NEC firmware effecting game performance, etc.), then
DWANGO shall make commercially reasonable efforts to remedy the
problem in a timely manner.
In the event that Star Diversion materially fails to operate in
accordance with the specification, NEC may suspend preloading Star
Diversion on the NEC 515 Handset until such time as DWANGO corrects
the problem.
4. Ownership
DWANGO hereby acknowledges that NEC owns all Intellectual Property Rights
in and to all content, products, services, specifications, documentation,
software and other materials supplied, licensed or otherwise owned by NEC. NEC
hereby acknowledges that DWANGO owns all Intellectual Property Rights in and to
all content, products, services, specifications, documentation, software and
other materials supplied, licensed or otherwise owned by DWANGO. No Party shall
assert copyright, trademark, patent or other intellectual property right or
other proprietary rights in the other Parties' intellectual property or in any
element, derivation, adaptation or variation thereof. All rights not expressly
granted under this Agreement are reserved.
The Parties hereby acknowledge that all right, title and interest in and to
all clearly jointly created content, products, services, specifications,
documentation, software and other materials shall be agreed upon and set forth
in the definitive agreement.
5. Indemnification
Notwithstanding anything otherwise contained herein to the contrary, DWANGO
will fully indemnify, hold harmless and defend NEC, at DWANGO's own expense,
against any and all liability, damage claims and expenses, including reasonable
attorney's fees, arising from claims that the DWANGO Licensed Property and/or
any version of Star Diversion provided by DWANGO infringes any United States,
Canadian or Mexican patent, copyright, trademark, trade secret or any other
Intellectual Property Right, provided that NEC promptly notifies DWANGO of any
such claim after receiving service of process, provides reasonable assistance to
DWANGO and allows DWANGO to control any resulting litigation to the extent it
prosecutes or defends such litigation with counsel reasonably acceptable to NEC
and in a reasonable and responsible manner and/or settlement negotiations,
except to the extent that any such settlement might involve claims not covered
by this indemnity or might have a materially adverse affect on NEC. DWANGO shall
reimburse NEC for reasonable expenses, including attorney's fees, incurred in
providing such assistance. In addition, DWANGO shall pass through to NEC any and
all third party indemnities provided DWANGO for DWANGO Licensed Property and/or
any version of Star Diversion.
If a claim of infringement described in this paragraph does occur, NEC will
permit DWANGO at its option and expense:
i) To modify the DWANGO Licensed Property and/or any version of Star
Diversion so that it no longer infringes while performing
substantially the same functions; or
ii) To obtain for NEC the right to continue redistributing the DWANGO
Licensed Property and/or any version of Star Diversion provided by
DWANGO.
However, in no event shall (i) or (ii) above, relieve DWANGO of any of its
obligations under this Section.
Notwithstanding anything otherwise contained herein to the contrary, NEC
will fully indemnify, hold harmless and defend DWANGO, at NEC's own expense,
against any and all liability, damage claims and expenses, including reasonable
attorney's fees, arising from claims that the NEC Marks and/or the
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NEC 515 Handset infringes any United States, Canadian or Mexican patent,
copyright, trademark, trade secret or any other Intellectual Property Right,
provided that DWANGO promptly notifies NEC of any such claim after receiving
service of process, provides reasonable assistance to NEC and allows NEC to
control any resulting litigation to the extent it prosecutes or defends such
litigation with counsel reasonably acceptable to DWANGO and in a reasonable and
responsible manner and/or settlement negotiations, except to the extent that any
such settlement might involve claims not covered by this indemnity or might have
a materially adverse affect on DWANGO. NEC shall reimburse DWANGO for reasonable
expenses, including attorney's fees, incurred in providing such assistance. In
addition, NEC shall pass through to DWANGO any and all third party indemnities
provided NEC for the NEC Marks and/or any the NEC 515 Handset.
If a claim of infringement described in this paragraph does occur, DWANGO
will permit NEC at its option and expense:
i) To modify the NEC Marks and/or the NEC 515 Handset so that it no
longer infringes while performing substantially the same functions; or
ii) To obtain for DWANGO the right to continue to use the NEC Marks.
However, in no event shall (i) or (ii) above, relieve NEC of any of its
obligations under this Section.
6. Revenue Sharing
DWANGO agrees that NEC shall be entitled to receive a percentage of the
revenue arising out of Star Diversion as set forth in Exhibit A hereto. Except
as set forth in Exhibit A, DWANGO shall be entitled to all revenue arising out
of Star Diversion.
7. Insurance
During the term of this Agreement, DWANGO shall maintain comprehensive
general liability insurance with a general aggregate limit of $1,000,000.
8. Term and Termination
This Agreement shall be effective as of the Effective Date and shall
continue in full force and effect for a period of six (6) months. After the
initial term, this Agreement will automatically renew for additional periods of
six (6) months each and shall continue until NEC no longer offers service
support for the NEC 515 Handsets or until this Agreement is terminated pursuant
to the provisions of this Section. The Parties hereby agree that the automatic
renewal provision of this Agreement shall not extend the exclusivity period
provided for in Paragraph 3 c. Regardless of any renewal of this Agreement,
after October 31, 2003, DWANGO shall have the right to offer Star Diversion in
any manner that DWANGO may choose. Either Party may terminate this Agreement
based on the material breach of this Agreement by the other Party so long as the
terminating Party has given the other Party thirty (30) days prior written
notice specifying the circumstances of the breach. The termination shall become
effective after the lapse of such 30 days, unless the events or circumstances
specified in the notice have been reasonably remedied or a plan for remedying
them in a prompt and effective manner has been proposed to the reasonable
satisfaction of the terminating Party.
9. Confidentiality Agreement
Each of the Parties hereby acknowledges that all Confidential Material of
the other Parties
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constitutes confidential information of the other Parties and must be kept
confidential. Each Party acknowledges the unique and proprietary nature of the
Confidential Material of the other Parties. In addition, each Party agrees that
it shall not disclose the Confidential Material, or any part thereof, to any
person or entity without the prior written consent of the other Party; and each
Party also agrees that it shall treat the other Party's Confidential Material as
confidential and proprietary information of the other Party. Notwithstanding
the above DWANGO expressly agrees that NEC may disclose DWANGO Confidential
Material to NEC Corporation and affiliates thereof, provided NEC Corporation and
affiliates thereof agree to abide by the confidentiality obligations contained
herein. In addition, notwithstanding anything to the contrary herein, the
representations and obligations of the Parties contained within this paragraph 9
shall survive any termination or expiration of this Agreement for a period of
three (3) years.
The obligations of this Paragraph 9 shall not apply to any Confidential
Material which (a) is or becomes available to the public through no breach of
this Agreement; (b) is independently developed by a Party without the use of
Confidential Material of the other Parties; (c) is approved for release by
written authorization of the disclosing Party, but only to the extent of and
subject to such conditions as may be imposed in such written authorization; (d)
is required by law or regulation to be disclosed, but only to the extent and for
the purposes of such required disclosure; or (e) is disclosed in response to a
valid order of a court or other governmental body of the United States or any
political subdivisions thereof, but only to the extent of and for the purposes
of such order; provided, however, that the Party receiving the Confidential
Material shall first notify the disclosing Party hereto of the order.
10. Warranties
The Parties hereby warrant and represent that they have full legal rights
and authority to enter into this Agreement and to perform their obligations
hereunder, and that by entering into this Agreement or performing their
obligations hereunder, they are not in default or breach of any contract or
agreement with any third party and they are not violating or infringing upon the
rights of any third party. The Parties represent and warrant that they are not
prohibited nor in any manner otherwise restricted, by any law, regulation or
administrative or judicial order of the United States from entering into this
Agreement or carrying out its provisions or the transactions contemplated
thereby.
Furthermore, DWANGO expressly warrants that Star Diversion shall not: (a)
contain any hidden files; (b) replicate or activate itself without control of an
end-user operating the handset on which it resides; (c) alter, damage or erase
any data or computer programs without control of an end-user operating the
handset on which it resides; (d) contain any worms, viruses, trap-doors or
similar illicit code. In the event of a defect, at NEC's option, DWANGO shall
provide a patch or fix for such defect in a commercially reasonably period of
time or immediately provide assistance necessary to correct such defect.
EXCEPT AS EXPRESSLY PROVIDED HEREIN, NO WARRANTIES ARE MADE BY THE PARTIES,
AND EACH OF THE PARTIES HEREBY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
11. Choice of Law and Venue
This Agreement shall be governed, construed and enforced in accordance with
the laws of the state of Texas (without regard to its principles of choice of
law), and applicable federal law.
12. Notice
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Unless otherwise directed in writing by the Parties, all notices
("Notice(s)") given hereunder and all payments made hereunder shall be sent to
the addresses set forth on the first page of this Agreement. All notices,
requests, consents and other communications under this Agreement shall be in
writing and shall be deemed to have been delivered on the date personally
delivered or three (3) days after the date deposited in the national Postal
Service, postage prepaid.
13. Severability
Each and every clause of this Agreement is severable from the whole and
shall survive unless the entire Agreement is declared unenforceable.
14. Entire Agreement
This Agreement constitutes the entire understanding between the Parties
regarding the subject matter hereof. No modification or change in this Agreement
shall be valid or binding upon the Parties unless in writing, executed by the
parties to be bound thereby.
15. Assignability
No rights or interest arising under this Agreement may be transferred or
assigned by any Party without the prior written consent of the other Parties,
provided that any Party may assign this Agreement in whole or part without
consent to any entity controlling, controlled by or under common control with
such Party, or to any entity that acquires such Party by purchase of stock or by
merger or otherwise, or by obtaining substantially all of the assets of such
Party's applicable business unit.
16. Not a Partnership
This Agreement does not constitute and shall not be construed as
constituting a partnership or joint venture among the Parties hereto, or an
employee-employer relationship. No Party shall have any right to obligate or
bind any other Party in any manner whatsoever, and nothing herein contained
shall give, or is intended to give, any rights of any kind to any third persons.
17. Counterparts
This Agreement may be executed in several counterparts, each of which will
be deemed to be an original, and each of which alone and all of which together,
shall constitute one and the same instrument, but in making proof of this
Agreement it shall not be necessary to produce or account for each copy of any
counterpart other than the counterpart signed by the Party against whom this
Agreement is to be enforced. This Agreement may be transmitted by facsimile, and
it is the intent of the parties for the facsimile of any autograph printed by a
receiving facsimile machine to be an original signature and for the facsimile
and any complete photocopy of the Agreement to be deemed an original
counterpart.
18. Attorney's Fees
The prevailing Party in any legal proceedings to enforce this Agreement or
to recover damages because of an alleged breach thereof shall be entitled to
recover its reasonable attorneys' fees and costs.
19. Captions
All captions in this Agreement are intended solely for the convenience of
the Parties, and none
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shall affect the meaning or construction of any provision.
20. Survival of Agreement
Upon termination or expiration of this Agreement for any reason, the
following provisions of this Agreement shall survive: Sections 1, 4, 5, 7, 8, 9,
10, 11, 13, 14, 15, 16, 17, 18, 19 and 20.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives as of the Effective Date.
NEC America, Inc. Dwango North America, Inc.
By: /s/ XXXXXX XXXXXX By: /s/ F. XXXXXX XXXXXXXX
--------------------------------- ----------------------------------
Name: XXXXXX XXXXXX F. Xxxxxx Xxxxxxxx III, President
-------------------------------- Dwango Wireless, a division of
Title: GM Dwango North America, Inc.
-------------------------------
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EXHIBIT A
Additional Services and Revenue Sharing:
1. a. Without limiting DWANGO's obligations outlined in Section 10 of this
Agreement, DWANGO expressly agrees that it shall enter into arrangements
directly with AWS in order to allow DWANGO to participate in AWS's e-Wallet and
Qpass programs (collectively the "programs"). In addition, DWANGO expressly
agrees that it shall comply with all requirements of the programs and that it
shall provide all direct operational support for programs necessary to
facilitate downloads of Star Diversion to the NEC 515 in the following
situations:
i) From an NEC 515 running the trial version - a link in the trial version
directs the NEC 515 user to DWANGO's website and an upgraded version of
Star Diversion is purchased via e-Wallet; or
ii) From the NEC 515 browser - the NEC 515 user purchases Star Diversion
(via e-Wallet) through a link on NEC's wireless portal site; or
iii) From the NEC branded wired Web site - the NEC 515 user purchases Star
Diversion through a link on NEC's wired Web site that results in an SMS
message being sent to the NEC 515 handset containing the URL of the Star
Diversion game that allows the user to purchase the Star Diversion (via
e-Wallet) from the NEC 515 browser.
b. In addition, without limiting DWANGO's obligations outlined in Section 10 of
this Agreement, DWANGO expressly agrees that it shall fully comply with the
then-current AWS Service Level Agreement, and that it will provide a service
operating report within ten (10) business days of NEC's request. Such report
shall contain all information as reasonably requested by NEC, including but not
limited to, service performance requirements and customer satisfaction issues as
outlined in the Service Level Agreement.
2. DWANGO shall share revenue with NEC for each copy of Star Diversion which is
purchased in the manner outlined in 1(a)(i),(ii) or (iii) above, in accordance
with the following:
a) An amount equal to [*] for such copies.
b) For the purposes of this Attachment, "Net Revenues" means any and all
fees received by DWANGO for the copies.
3. All payments of the shared revenues are to be made quarterly starting at the
end of the first calendar quarter following the first commercial shipment of NEC
515 containing the trial version. Such payments will be due thirty (30) days
after the end of each calendar quarter. Payments made after thirty days will
accrue an interest of one percent (1%) per month on the unpaid amount. DWANGO
shall also include the following information with such shared revenue payments:
total sales of upgraded copies of Star Diversion and Net Revenues from such
upgraded copies for the pertinent calendar quarter.
4. Mailing Address for Payments:
All payments of the shared revenues will be sent to the accounting notification
address listed below:
NEC America, Inc.
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
5. During the term of the Agreement and for a period of one (1) year thereafter,
DWANGO will maintain complete, clear and accurate records of all sales and
revenues generated in connection this Agreement.
----------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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NEC will have the right, at its expense, upon ten (10) days' prior written
notice and no more than twice per year, to inspect and audit during DWANGO's
normal business hours DWANGO's books and records that pertain to DWANGO's
performance under this Agreement, and to all sales and revenues generated in
connection with this Agreement for the purpose of verifying any reports,
information or payments due to NEC under this Agreement. In the event a
shortfall of at least five percent (5%) in payment is found, DWANGO will
promptly reimburse NEC within five (5) business days the full amount of such
shortfall with interest from the date such amounts were due and payable at the
prime rate in effect at such time and the costs incurred to perform the
inspection and audit.
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