Exhibit 10.32
CONFIDENTIAL LICENSE
AGREEMENT
FOR NINTENDO DS (Western
Hemisphere)
THIS LICENSE AGREEMENT
(“Agreement”) is entered into between NINTENDO OF
AMERICA INC. (“NOA”), at 4820 150th Avenue N.E.,
Redmond, WA 98052 Attn: General Counsel (Fax:
425-882-3585) and THQ Inc. (“LICENSEE”) at 27001 Agoura
Road, Suite 325, Calabasas Hills, CA 91301 Attn: Brian
J. Farrell (Fax: (818) 871-7400). NOA and LICENSEE agree as
follows:
1.
RECITALS
1.1
NOA markets and sells advanced
design, high-quality video game systems, including the Nintendo DS
system.
1.2
LICENSEE desires a license to use
highly proprietary programming specifications, development tools,
trademarks and other valuable intellectual property rights of NOA
and its parent company, Nintendo Co., Ltd. (collectively
“Nintendo”), to develop, have developed (subject to
Section 4.2 below), have manufactured, advertise, market and
sell video game software for play on the Nintendo DS
system.
1.3
NOA is willing to grant a license to
LICENSEE on the terms and conditions set forth in this
Agreement.
2.
DEFINITIONS
2.1
“Artwork” means the
design specifications for the Game Card label and Printed Materials
in the format specified by NOA in the Guidelines.
2.2
“Bulk Goods” means the
Game Cards with Game Card labels affixed.
2.3
“Development Tools”
means the development kits, programming tools, emulators and other
materials that may be used in the development of Games under this
Agreement.
2.4
“Effective Date” means
November 1, 2004.
2.5
“Finished Product(s)”
means the fully assembled and shrink-wrapped Licensed Products,
each including a Game Card, Game Card label and Printed
Materials.
2.6
“Game Card(s)” means
custom card media specifically manufactured under the terms of this
Agreement for play on the Nintendo DS system, incorporating
semiconductor components in which a Game has been
stored.
2.7
“Game(s)” means the
Nintendo DS version of an interactive video game program, or other
applications approved by Nintendo (including source and
object/binary code) developed for the Nintendo DS
system.
2.8
“Guidelines” means the
current version or any future revision of the “Nintendo DS
Packaging Guidelines”, “Nintendo DS Development
Manual” and related guidelines provided by NOA to
LICENSEE.
2.9
“Independent Contractor”
means any individual or entity that is not an employee of LICENSEE,
including any independent programmer, consultant, contractor, board
member or advisor.
2.10
“Intellectual Property
Rights” means individually, collectively or in any
combination, Proprietary Rights owned, licensed or otherwise held
by Nintendo that are associated with the development,
manufacturing, advertising, marketing or sale of the Licensed
Products, including, without limitation, (a) registered and
unregistered trademarks and trademark applications used in
connection with
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Games for the Nintendo DS system including
“Nintendo®”, “Nintendo DS™”,
“DS™”, and the “Official Nintendo
Seal®”, (b) select trade dress associated with the
Nintendo DS system and licensed Games for play thereon,
(c) Proprietary Rights in the Security Technology incorporated
into the Game Cards, (d) rights in the Development Tools for
use in developing the Games, (e) patents or design
registrations associated with the Game Cards, (f) copyrights
in the Guidelines, and (g) other Proprietary Rights of
Nintendo in the Confidential Information (as defined in
Section 8.1).
2.11
“Licensed Products”
means (a) Finished Products, or (b) Bulk Goods when fully
assembled and shrink-wrapped with the Printed Materials.
2.12
“Marketing Materials”
means marketing, advertising or promotional materials developed by
or for LICENSEE (or subject to LICENSEE’s approval) to
promote the sale of the Licensed Products, including, but not
limited to, television, radio and on-line advertising,
point-of-sale materials (e.g. posters, counter-cards), package
advertising and print media or materials.
2.13
“NDA” means the
non-disclosure agreement providing for the protection of
Confidential Information related to the Nintendo DS system
previously entered into between NOA and LICENSEE.
2.14
“Notice” means any
notice permitted or required under this Agreement. All
notices shall be sufficiently given when (a) personally served
or delivered, (b) transmitted by facsimile, with an original
sent concurrently by first class U.S. mail, or (c) deposited,
postage prepaid, with a guaranteed air courier service, in each
case addressed as stated herein, or addressed to such other person
or address either party may designate in a Notice. Notice
shall be deemed effective upon the earlier of actual receipt or two
(2) business days after transmittal.
2.15
“Price Schedule” means
the current version or any future revision of NOA’s
schedule of purchase prices and minimum order quantities for
Finished Products and Bulk Goods.
2.16
“Printed Materials”
means the Game Card label and title sheet, user instruction
booklet, poster, warranty card and LICENSEE inserts incorporating
the Artwork, together with a precautions booklet as specified by
NOA.
2.17
“Proprietary Rights”
means any rights or applications for rights owned, licensed or
otherwise held in patents, trademarks, service marks, copyrights,
mask works, trade secrets, trade dress, moral rights and publicity
rights, together with all inventions, discoveries, ideas,
technology, know-how, data, information, processes, formulas,
drawings and designs, licenses, computer programs, software source
code and object code, and all amendments, modifications, and
improvements thereto for which such patent, trademark, service
mark, copyright, mask work, trade secrets, trade dress, moral
rights or publicity rights may exist or may be sought and obtained
in the future.
2.18
“Reverse Engineer(ing)”
means, without limitation, (a) the x-ray, electronic scanning
or physical or chemical stripping of semiconductor components,
(b) the disassembly, decompilation, decryption or simulation
of object code or executable code, or (c) any other technique
designed to extract source code or facilitate the duplication of a
program or product.
2.19
“Security Technology”
means, without limitation, any security signature, bios, data
scrambling, password, hardware security apparatus, watermark,
hologram, encryption, Digital Rights management system, copyright
management information system or any feature that facilitates or
limits compatibility with other hardware, software, or accessories
or other peripherals outside of the Territory or on a different
video game system.
2.20
“Term” means three
(3) years from the Effective Date.
2.21
“Territory” means all
countries within the Western Hemisphere and their respective
territories and possessions.
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3.
GRANT OF LICENSE; LICENSEE
RESTRICTIONS
3.1
Limited License Grant
. For the Term and for the
Territory, NOA grants to LICENSEE a nonexclusive, nontransferable,
limited license to use the Intellectual Property Rights to develop,
and have developed (subject to Section 4.2 below), Games for
manufacture, advertising, marketing and sale as Licensed Products,
subject to the terms and conditions of this Agreement. Except
as permitted under a separate written authorization from Nintendo,
LICENSEE shall not use the Intellectual Property Rights for any
other purpose.
3.2
LICENSEE
Acknowledgement .
LICENSEE acknowledges (a) the valuable nature of the
Intellectual Property Rights, (b) the right, title, and
interest of Nintendo in and to the Intellectual Property Rights,
and (c) the right, title and interest of Nintendo in and to
the Proprietary Rights associated with all aspects of the Nintendo
DS system. LICENSEE recognizes that the Games, Game Cards and
Licensed Products will embody valuable rights of Nintendo and
Nintendo’s licensors. LICENSEE represents and warrants
that it will not knowingly undertake any act or thing that in any
way impairs or is intended to impair any part of the right, title,
interest or goodwill of Nintendo in the Intellectual Property
Rights. LICENSEE’s use of the Intellectual Property
Rights shall not create any right, title or interest of LICENSEE
therein. ****
3.3
LICENSEE Restrictions and
Prohibitions .
LICENSEE is not licensed to, and covenants that, without the
express written consent of Nintendo, it will not at any time,
directly or indirectly, do or cause to be done any of the
following:
(a)
grant access to, distribute,
transmit or broadcast a Game by electronic means or by any other
means known or hereafter devised, including, without limitation, by
wireless, cable, fiber optic, telephone lines, microwave,
radiowave, computer or other device network, except (a) as a
part of wireless Game play on and among Nintendo DS systems,
(b) for the purpose of facilitating Game development under the
terms of this Agreement, or (c) as otherwise approved in
writing by Nintendo. LICENSEE shall use reasonable security
measures, customary within the high technology industry, to reduce
the risk of unauthorized interception or retransmission of any Game
transmission. No right of retransmission shall attach to any
authorized transmission of a Game,
(b)
modify, install or operate a Game on
any server or other device for the purpose of or resulting in the
rental, lease, loan or sale of rights of access to the
Game,
(c)
emulate, interoperate, interface or
link a Game for operation or use with any hardware platform,
software program, accessory, computer language, computer
environment, chip instruction set, consumer electronics device,
telephone, cellphone, PDA, or other device, including for purposes
of data interchange, password usage or interactive video game play,
other than a Nintendo DS system, an application approved by
Nintendo, or the Development Tools,
(d)
emulate any past, current or future
Nintendo brand video game system, or any portion thereof, in
software or hardware or any combination thereof,
(e)
embed, incorporate, or store a Game
in any media or format except the Game Card format utilized by the
Nintendo DS system, except as may be necessary as a part of the
Game development process under this Agreement,
(f)
design, implement or undertake any
process, procedure, program or act designed to circumvent the
Security Technology,
(g)
utilize the Intellectual Property
Rights to design or develop any interactive video game program,
except as authorized under this Agreement,
* Confidential portion omitted and filed
separately with the Securities and Exchange Commission.
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(h)
manufacture or reproduce a Game
developed under this Agreement, except through Nintendo,
or
(i)
Reverse Engineer or assist in the
Reverse Engineering of all or any part of the Nintendo DS system,
including the hardware or software (whether embedded or otherwise),
the Development Tools or the Security Technology.
****
3.4
No Free-Riding; No Co-Publishing
Arrangements . To
protect Nintendo’s valuable Intellectual Property Rights, to
prevent the dilution of Nintendo’s trademarks and to preclude
free-riding by third parties on the goodwill associated with
Nintendo’s trademarks, the license granted under this
Agreement is limited to LICENSEE and may not be delegated or
contracted out for the benefit of a third party, or to a division,
affiliate, or subsidiary of LICENSEE. This Agreement,
together with all submissions, representations, undertakings and
approvals contemplated of LICENSEE by this Agreement, is and shall
remain the right and obligation only of LICENSEE. All Printed
Materials and Marketing Materials for a Game shall prominently and
accurately identify LICENSEE as NOA’s licensee. NOA
does not permit the designation or identification of any third
party co-publisher for a Game on any Licensed Product Game Card
case or Game Card label, however, LICENSEE may identify a third
party as a co-publisher, licensor, developer or other partner of
LICENSEE in those Printed Materials (other than the Game Card
label), Marketing Materials or Game credits, as authorized under
the Guidelines. For purposes of clarification, LICENSEE’s
name, or logo, will appear on the Licensed Product Game Card case
and Game Card label as it appears in the preamble of this
Agreement.
3.5
Development Tools
. Nintendo may lease, loan or
sell Development Tools to LICENSEE to assist in the development of
Games under this Agreement. Ownership and use of any
Development Tools provided to LICENSEE by Nintendo shall be subject
to the terms of this Agreement and any separate license or purchase
agreement required by Nintendo. LICENSEE acknowledges the
exclusive interest of Nintendo in and to the Proprietary Rights
associated with the Development Tools. LICENSEE’s use
of the Development Tools shall not create any right, title or
interest of LICENSEE therein. LICENSEE shall not, directly or
indirectly, (a) use the Development Tools for any purpose
except the design and development of Games under this Agreement,
(b) reproduce or create derivatives of the Development Tools,
except in association with the development of Games under this
Agreement, (c) Reverse Engineer the Development Tools, or
(d) without NOA’s prior written approval, sell, lease,
assign, lend, license, encumber or otherwise transfer the
Development Tools. Any tools developed or derived by LICENSEE
as a result of a study of the performance, design or operation of
the Development Tools shall be considered derivative works of the
Intellectual Property Rights and shall belong to Nintendo, but may
be retained and utilized by LICENSEE in connection with this
Agreement. In no event shall LICENSEE (i) seek, claim or
file for any patent, copyright or other Proprietary Right with
regard to any such derivative work, (ii) make available any
such derivative work to any third party, or (iii) use any such
derivative work except in connection with the design and
development of Games under this Agreement.
4.
SUBMISSION OF GAME AND ARTWORK
FOR APPROVAL
4.1
Development and Sale of the
Games . LICENSEE
may develop, or have developed (subject to Section 4.2 below),
Games and have manufactured, advertise, market and sell Licensed
Products for play on the Nintendo DS system only in accordance with
this Agreement.
4.2
Third Party Developers
. LICENSEE shall not disclose
the Confidential Information (as defined in Section 8 below),
the Guidelines or the Intellectual Property Rights to any
Independent Contractor, nor permit any Independent Contractor to
perform or assist in development work for a Game, unless and until
such Independent Contractor has been approved by NOA and has
executed a written confidentiality agreement with NOA relating to
the Nintendo DS system. ****
* Confidential portion omitted and filed
separately with the Securities and Exchange Commission.
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4.3
Delivery of Completed
Game . Upon
completion of a Game, LICENSEE shall deliver a prototype of the
Game to NOA in a format specified in the Guidelines, together with
written user instructions, a complete description of any security
holes, backdoors, time bombs, cheats, “easter eggs” or
other hidden features or characters in the Game ****, and a
complete screen text script. NOA shall promptly evaluate the
Game with regard to its technical compatibility with and error-free
operation on the Nintendo DS system. LICENSEE is responsible
for ensuring that the Game and any other content to be included on
the Game Card complies with the Advertising Code of Conduct of the
Entertainment Software Ratings Board (“ESRB”) and that
the Game has been rated EC, E, M or T by the ESRB. LICENSEE
shall provide NOA with a related certificate of rating for the Game
from the ESRB.
4.4
Approval of Completed
Game . NOA shall,
within a reasonable period of time after receipt, approve or
disapprove each submitted Game ****. If a Game is
disapproved, NOA shall specify in writing the reasons for such
disapproval and state what corrections or improvements are
necessary to ****. After making the necessary corrections or
improvements, LICENSEE shall submit a revised Game to NOA for
approval. NOA shall not unreasonably withhold or delay its
approval of any Game. The approval of a Game by NOA shall not
relieve LICENSEE of its sole responsibility for the development,
quality and operation of the Game or in any way create any warranty
for a Game or a Licensed Product by NOA.
4.5
Submission of Artwork
. Upon submission of a
completed Game to NOA, LICENSEE shall prepare and submit to NOA the
Artwork for the proposed Licensed Product. Within seven
(7) business days of receipt, NOA shall approve or disapprove
the Artwork ****. If any Artwork is disapproved, NOA shall
specify in writing the reasons for such disapproval and state what
corrections or improvements are necessary ****. After making
the necessary corrections or improvements, LICENSEE shall submit
revised Artwork to NOA for approval. NOA shall not
unreasonably withhold or delay its approval of any Artwork.
The approval of the Artwork by NOA shall not relieve LICENSEE of
its sole responsibility for the development and quality of the
Artwork or in any way create any warranty for the Artwork or any
Licensed Product by NOA.
4.6
Artwork for Bulk Goods
. If LICENSEE submits an order
for Bulk Goods, all Artwork shall be submitted to NOA in advance of
NOA’s acceptance of the order and no production of Printed
Materials shall occur until such Artwork has been approved by NOA
under Section 4.5 herein.
5.
ORDER PROCESS, PURCHASE PRICE,
PAYMENT AND DELIVERY
5.1
Submission of Orders by
LICENSEE . LICENSEE
may at any time submit written purchase orders to NOA for any
approved Licensed Product title. The purchase order shall
specify whether it is for Finished Products or Bulk Goods.
The terms and conditions of this Agreement shall control over any
contrary terms of such purchase order or any other written
documents submitted by LICENSEE. All orders are subject to
acceptance by NOA in Redmond, WA.
5.2
Purchase Price and Minimum Order
Quantities . The
purchase price and minimum order quantities for Finished Products
and Bulk Goods shall be set forth in NOA’s then current
written Price Schedule. The purchase price includes the cost
of manufacturing together with a royalty for the use of the
Intellectual Property Rights. No taxes, duties, import fees
or other tariffs related to the development, manufacture, import,
marketing or sale of the Licensed Products are included in the
purchase price and all such taxes are the responsibility of
LICENSEE (except for taxes imposed on NOA’s income).
The Price Schedule is subject to change by NOA at any time,
provided, however, that any price increase shall be applicable only
to purchase orders submitted, paid for, and accepted by NOA after
the effective date of the price increase.
* Confidential portion omitted and filed
separately with the Securities and Exchange Commission.
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5.3
Payment . Upon placement of an order with NOA,
LICENSEE shall pay the full purchase price to NOA either
(a) by placement of an irrevocable letter of credit in favor
of NOA and payable at sight, issued by a bank acceptable to NOA and
confirmed, if requested by NOA, at LICENSEE’s expense, or
(b) in cash, by wire transfer to NOA’s designated
account. All associated banking charges are the
responsibility of the LICENSEE.
5.4
Shipment and Delivery
. All Licensed Products shall
be delivered to LICENSEE EXW Ex works Japan (as defined by
Incoterms 2000), or such other delivery point specified by NOA,
with shipment at LICENSEE’s direction and expense.
Orders may be delivered by NOA in partial shipments, each directed
to not more than two (2) destinations designated by LICENSEE
within the Territory. Title to the Licensed Products shall
vest in accordance with the terms of the applicable letter of
credit or, in the absence thereof, at the point of
delivery.
6.
MANUFACTURE OF THE LICENSED
PRODUCT
6.1
Manufacturing
. Nintendo shall be the
exclusive source for the manufacture of the Game Cards, and shall
control all aspects of the manufacturing process, including the
selection of the locations and specifications for any manufacturing
facilities, determination of materials and processes, appointment
of suppliers and subcontractors and management of all
work-in-progress.
6.2
Manufacture of the Licensed
Products . Upon
acceptance by NOA of a purchase order for an approved Licensed
Product title and payment as provided for under Section 5.3
herein, NOA will arrange for the manufacture of Finished Product or
Bulk Goods, as specified in LICENSEE’s purchase
order.
6.3
Security Features
. The final release version of
the Game, Game Cards and Printed Materials shall include such
Security Technology as Nintendo, in its sole discretion and at its
sole expense, may deem necessary or appropriate.
6.4
Production of Bulk Goods Printed
Materials . For
Bulk Goods, LICENSEE shall arrange and pay for the production of
the Printed Materials using the Artwork. Upon receipt of an
order of Bulk Goods, LICENSEE shall assemble the Game Cards and
Printed Materials into the Licensed Products. Games may be
sold or otherwise distributed by LICENSEE only in fully assembled
and shrink-wrapped Licensed Products.
6.5
Prior Approval of
LICENSEE’s Independent Contractor . Prior to the placement of a purchase
order for Bulk Goods, LICENSEE shall obtain NOA’s approval of
any Independent Contractors selected to perform LICENSEE’s
production and assembly operations. LICENSEE shall provide
NOA with the names, addresses and all business documentation
reasonably requested by NOA for such Independent Contractors.
NOA may, prior to approval and at reasonable intervals thereafter,
(a) require submission of additional business or financial
information regarding the Independent Contractors, (b) inspect
the facilities of the Independent Contractors ****, and (c) be
present to supervise any work on the Licensed Pr
