Exhibit
10.36
MASTER SOFTWARE LICENSE AND DEVELOPMENT AGREEMENT
-------------------------------------------------
THIS AGREEMENT (the "Agreement"), dated as of April 11, 2006, is
entered into by
and between NS8
Corporation, a
Delaware corporation
with its offices at
1420
Fifth Avenue, 22nd Floor, Seattle, Washington 98101 or its assignee
("NS8"), and
True Digital Entertainment Company Limited ("Licensee"), whose
registered office
is at No. 1 Fortune
Town Bldg. (25th
Floor), Ratchadaphisek Rd., Din Daeng,
Bangkok 10400,
Thailand. Each party
hereto is also individually referred to as
"Party" and together referred to as the "Parties".
RECITALS
A.
Licensee is
aggregating
certain music content rights in relation to
online music
distribution
("Licensee
Content") as a result
of various
license agreements
entered or to be
entered into between
Licensee and
Content Owners.
B.
Licensee is in the
business of online and
digital content
services to
end-consumers by means of its Services (as defined). Licensee requires a
Music Manager (as defined) that will include a DRM reporting
feature for
its
online music service
platform. A prototype of NS8's design for
the
Music Manager is presented in Schedule D.
C.
NS8 and Licensee agree to enter into a business arrangement whereby NS8
will
provide Licensee
with certain software development services as
described herein for
the purpose of
creating a client
installed music
content download
manager and player for
online music content
services
("Music Manager").
In consideration of the premises and the respective covenants contained herein
and for other good and valuable consideration, the receipt and
adequacy of which
are hereby acknowledged, the Parties hereby agree as follows:
1.
DEFINITIONS
All capitalized
terms used herein and
not otherwise defined
in this Agreement
shall have the meanings set forth below.
1.1
"Affiliate" shall mean, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under common
control with,
such person and
"control" (including,
with correlative meanings, the terms
"controlled by" and
"under common control
with"), as used with
respect to any
person, means the possession, directly or indirectly, of the
power to direct or
cause the direction of
the management
and policies of such person, whether
through the
ownership of voting securities, by contract or otherwise.
"Affiliated" shall have a correlative meaning.
1.2
"Business Day" shall mean any day other than (i) a Saturday or
Sunday
or (ii) any day on which banks in the Territory or the State of
California
are
closed or authorized to be closed.
1.3
"Downloading" shall
mean the transmission of a program from a remote
source which is intended for storage by and for listening
subsequent to the time
of its transmission to
the downloading party
(although such listening may also
take place while downloading occurs).
1.4
"Downloading Period"
shall mean a period commencing at the time that
a Subscriber first begins downloading Licensee Content and ending on the
end of
the Subscription Period of such Licensee Content.
1.5
"NS8 Revenue Share" shall mean NS8's share of Revenue as specified
in
Schedule A.
1.6
"Permitted Assignment"
shall mean an assignment and transfer of part
or whole of the rights and/or obligations under this Agreement with the prior
written consent of the
other Party or an
assignment
and transfer of part or
whole of the rights and/or obligations under this Agreement
to any Affiliate of
a Party by notifying the other Party in writing in advance of such
assignment.
1.7
"Service" shall mean the Licensee's branded transmission service(s)
described in this Agreement or its Schedules through which Licensee transmits
Licensee Content either (a) to a personal computer securely, (b) to a portable
or stationary (MP3) player computer securely, (c) to a mobile (music) phone,
or
(d) to a device (whether now known or hereafter developed) which is capable of
receiving Licensee Content.
1.8
"Service Commencement Date" shall mean the date specified in
Schedule
A.
1.9
"Software" shall mean NS8 software described in this Agreement or
the
Schedules hereto
whether any such
software is
provided to or
developed for
Licensee.
1.10
"Subscriber" shall
mean a person in the Territory who has undergone
a specific registration process who is authorized to receive
Licensee Content as
part of the Licensee's Service.
1.11
"Subscriber
Transaction"
shall
mean any instance whereby a
Subscriber orders or
is provided any Licensee Content for a single Downloading
Period as part of the Service.
1.12
"Subscription
Period" shall mean the period that a
Subscriber is
permitted to
receive Licensee Content as part of the
Licensee's
Service as
specified in Schedule C.
1.13
"Term" shall mean the period commencing on the date of this
Agreement and ending on the date specified in Schedule A.
1.14
"Territory" shall mean the territory specified in Schedule A.
2.
INCORPORATION OF SCHEDULES
2.1
Incorporation
of Schedules. The Schedules "A", "B", "C" and "D"
attached to this
Agreement shall for
all purposes be
incorporated
into this
Agreement and
form a part
hereof by this reference. Should there be any
contradiction between any term of this Agreement and a provision of
any Schedule
then the terms of this Agreement shall supercede the conflicting term of the
Schedule.
3. CUSTOM
DEVELOPMENT AND TECHNICAL SUPPORT
3.1
Development
and Technical Support. NS8 will provide custom
development and technical support to develop the Music Manager and
Licensee will
pay NS8 for those custom development and support costs as
described in Schedule
"B" of this Agreement ("Custom Development").
3.2 NS8 Engines.
NS8 will use certain
elements of its
proprietary code
architecture and
transaction
engines ("NS8 Engines") as part of the Custom
Development and it
hereby agrees to
license the use of those NS8 Engines to
Licensee for the Term of this Agreement for the purposes
contemplated
by this
Agreement in order to
customize and expedite the development of the Music
Manager. In addition to licensing and providing its NS8 Engines to
Licensee, NS8
will custom develop the Music Manager specifically to the feature and function
requirements provided
by Licensee as described in Schedule "C" of this
Agreement.
3.3
NS8 Annual Technical
Support. NS8 will, at
the request of Licensee,
provide its architects or engineers for onsite technical or upgrade
installation
support at Licensee's facilities for the Music Manager and Licensee
will pay NS8
for its fees, travel
and accommodation costs for providing such technical
support costs as described in Schedule "B" of this Agreement.
3.4
Custom Modifications
After First Release.
NS8 will provide Licensee
with: (i) upgrades for the Music Manager as may be necessary, (ii) remote
engineering and
version support for
the Music Manager;
and (iii) continuous
licensed component feature upgrades or continuous component maintenance as may
be necessary. Licensee will pay NS8 for its fees, travel and
accommodation costs
for providing such technical support costs as described in
Schedule "B" of this
Agreement.
3.5
Payment Frequency for
Music Manager
Development For First
Release.
Licensee will pay NS8
for the first release
of the Music Manager
based on the
Specifications set
forth in Schedule "C" of this Agreement in the amount and at
the times set out in Schedule "A" hereto.
4. GRANT OF
RIGHTS
4.1
Grant of NS8 Engine License Rights. The term of the license for
the
use of the NS8 Engines by Licensee will be for three (3) years from
the time of
commercial launch of
the Music Manager,
including its specific DRM reporting
features, at the
Licensee's facilities.
Licensee agrees that
it will not have
access to source code of the NS8 Engines or Music Manager and any modification
to the Music Manager
within its core features may only be made by qualified NS8
architects and engineers.
4.2
Grant of Content
License Rights and
Exclusivity.
NS8 shall grant
Licensee and its
Affiliates
exclusive rights to use the NS8 Engines and the
Music Manager
within Thailand for one (1) year commencing on the date of
commercial launch.
4.3
Intentionally Omitted.
4.4
Renewal of License
Term. Provided
Licensee is not in
default under
the terms of this Agreement, Licensee may exercise a renewal of the
Term of this
Agreement and the
License granted by NS8 to Licensee herein by delivering
written notice to NS8 no later than 90 days before the end of the
three (3) year
License Term.
Upon Licensee delivering to NS8 its notice of
its intention to
exercise the renewal of the License, the License herein granted shall
be deemed
renewed for an additional period of three (3) years upon the
same pricing terms
described in the Schedules attached hereto. However, certain development costs
may vary in the event Licensee requires additional development work or
modifications after the initial License Term of three (3) years.
Such additional
development costs will
be mutually determined
in good faith by both Parties at
such time.
5.
WARRANTY
5.1
Warranty. NS8 warrants to Licensee that for a period of 12 months
commencing on the date that Licensee commences the commercial launch of the
Licensee's Service
utilizing the Music Manager, as mutually determined by the
Parties, the
Software which is furnished to Licensee by NS8 will be free
of
defects in materials and workmanship under normal use for its
intended purpose.
5.2.
Disclaimer of
Warranty. UNLESS
SPECIFIED IN THIS
AGREEMENT,
ALL
EXPRESS OR IMPLIED
CONDITIONS,
REPRESENTATIONS AND
WARRANTIES, INCLUDING
ANY
IMPLIED WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT ARE DISCLAIMED, EXCEPT TO THE EXTENT THAT THESE
DISCLAIMERS ARE
HELD TO BE LEGALLY INVALID.
5.3
Limitation of
Liability. TO THE
EXTENT NOT PROHIBITED BY LAW, IN NO
EVENT WILL EITHER PARTY OR ITS LICENSORS BE LIABLE FOR ANY LOST
REVENUE, PROFIT
OR DATA, OR FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE
DAMAGES, HOWEVER CAUSED REGARDLESS OF THE THEORY OF LIABILITY,
ARISING OUT OF OR
RELATED TO THE USE OF OR INABILITY TO USE SOFTWARE, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. In no event will NS8's liability
to
you, whether in contract, tort (including negligence), or otherwise, exceed the
amount paid by you for Software under this Agreement. The foregoing limitations
will apply even if the above stated warranty fails of its essential purpose.
Some states do not allow the exclusion of incidental or
consequential
damages,
so some of the terms above may not be applicable to you.
6.
FINANCIAL ARRANGEMENTS
6.1
Payment of Revenue
Share. Licensee
shall pay the NS8
Revenue Share
(exclusive of
value added tax) to NS8 on a quarterly basis in the manner
calculated and at the
rate described in
Schedule A. The NS8 Revenue Share will
be paid by Licensee
to NS8 within
thirty (30) days after
the last day of each
January, April, July
and October in each year of the Term of this Agreement and
the License herein granted to Licensee. Payments will be
accompanied by a report
stating the number of Subscriber Transactions during the relevant
quarter, and
the calculation of the NS8 Revenue Share for the relevant payment
period.
6.2 NS8 Bank
Details. Unless and
until Licensee is otherwise notified by
NS8, all payments
hereunder shall be paid by wire transfer in United States
Dollars (converted
at the Exchange Rate in effect on the payment due date
according to the rate
announced by the Bank of Thailand) to NS8 at the bank
account specified in Schedule A hereto.
6.3
Late Payments. Any payment not made within fifteen (15) business
days
from the date that it is due under this Agreement and such late payment is not
attributable to NS8 shall accrue interest from the date such amount
is due until
payment is
received in full at the rate of 7.5 % per
annum of the
defaulting
amount.
6.4
Taxes. Licensee shall pay the NS8 Revenue Share under Section 6.1,
as
well as all charges from the development of the Software, to NS8
after deducting
applicable withholding
tax that is properly
chargeable to NS8 under applicable
governing law. NS8
shall pay its share of
corporate income tax
arising out of
the transactions
contemplated by this Agreement that NS8 is legally responsible
to pay under the applicable law governing corporate income tax. Licensee shall
be responsible
to pay for the
stamp duty and its own corporate income tax
arising out of this Agreement.
6.5
Currency Regulation. To the extent any sums due to NS8 hereunder
cannot be sent to NS8 because of currency restrictions or any other
governmental
regulation or restriction, NS8 may elect, in its sole and
absolute
discretion,
to have all such sums due to NS8 hereunder deposited by Licensee in an
interest
bearing account in the
name of NS8 or its designee at a bank designated by NS8
where payment is permitted, which deposit shall be in satisfaction
of Licensee's
payment obligations hereunder. Licensee shall document all deposits
made to such
account and the dates thereof.
6.6
e-Procurement.
NS8 agrees to follow a process of electronic
procurement (e-procurement) instructed by Licensee without any
additional charge
to Licensee.
7.
TECHNICAL AND OTHER SERVICES
7.1
Time of Delivery. NS8
guarantees a delivery
time to Licensee of May
4, 2006, provided that all signed and authorized specifications provided to NS8
by Licensee
("Specifications") are
complete and that no additional feature or
function requirements that modify the Specifications are provided
by Licensee to
NS8 during
the development process. Licensee agrees that if the Licensee
provides any addition or modification to the Specifications to NS8, other than
those provided
as described in Schedule "C" of this Agreement, then such
guaranteed delivery
time and the cost of any such development by NS8, as might
be necessary, may be adjusted accordingly by mutual agreement of
both Parties.
7.2
Delivery Guarantee & Special Conditions. NS8 guarantees delivery of
the Music Manager that will comply with the Specifications
attached as
Schedule
"C". Additional
Licensee specification requests or modifications during
development might
alter delivery time and costs. Any additions or modifications
to Schedule "C" by the Licensee will require the Licensee's
signature
approval.
Guaranteed delivery time will be certified once a final
specifications
meeting
between Licensee and
NS8 are complete and finalized for development. NS8 will
reduce its final custom development fee by 10% per week
(prorated at 0.143% for
each day) in the event the Music Manager is delayed from
development
completion
as a result of the direct fault of NS8.
7.3
NS8 Access. Licensee
shall provide NS8's developers with full onsite
cooperation, staff
supervised
access or remote network access as might be
necessary with respect
to Licensee's database
servers, engineering files or
servers, design
files or any other
hardware or software in order to assure
installation and
integration efficiency
with respect to the development of the
Music Manager.
7.4
Separate Agreement Required. This Agreement does not cover any
technical or other
services that may be provided by NS8 to Licensee other than
those specifically
contemplated in this
Agreement. In the
event that Licensee
desires NS8 to provide any such additional services, then any provision of such
additional services
would be subject to a
separate agreement to
be negotiated
between the Parties.
7.5
Travel & Accommodation Costs. Licensee will provide for the
payment
of reasonable travel and accommodation costs for NS8 integration
developers and
engineers, including
adequate office space and online connectivity within the
Licensee's facilities,
if necessary. All travel and accommodation expenses will
be mutually
determined
and agreed to by both parties in advance of any
expenditure being incurred.
7.4
Quality of Service
Warranty. NS8 will use
its best efforts to cure,
as described below, reported and reproducible errors in the
Software so that the
Software performs in
all material
respects the functions described in the
Specifications. NS8
recognizes
four severity levels of Software errors or
issues:
Severity 1 - High
Business Impact.
Licensee's
use of the
Software is
stopped or so severely
impacted that the Licensee cannot reasonably
continue work. NS8 will begin work on the Software error within two
hours
of
notification, and will
engage development
staff until an
acceptable
workaround is achieved. NS8 will provide a workaround or remedy the
error
or issue
within four hours of notification. After the workaround is
achieved, NS8 will
continue working diligently to achieve a
permanent
resolution of the error or issue.
Severity 2 - Significant Business Impact. Important Software
features are
unavailable with no acceptable workaround. Licensee's use of the
Software
is
continuing,
but there is a serious impact on the Licensee's
productivity and/or
service levels. NS8
will begin work on the Software
error within four
hours of notification,
and will engage development
staff until an
acceptable workaround
is achieved. NS8 will provide a
workaround or remedy
the error or issue within twenty-four hours of
notification. After the workaround is achieved, NS8 will continue
working
diligently to achieve a permanent resolution of the error or
issue.
Severity 3 - Some
Business Impact. Important Software features are
unavailable but a workaround is available, or less significant Software
features are unavailable with no reasonable workaround. Licensee's
use of
the
Software is continuing
with minor loss of
functionality.
NS8 will
provide an initial
response to requests for information or documentation
clarification within
twenty-four (24) hours
of notification,
and will
consider a workaround, if appropriate, or enhancements for
inclusion in a
subsequent upgrade of the Software.
Severity 4 - Minimal Business Impact. Licensee requests information or
documentation
clarification
regarding the
Software, but there is no
impact on the
operation of the
Software. NS8 will provide an initial
response
regarding the
requested
information
or documentation
clarification within forty-eight (48) hours of notification.
8.
PHYSICAL MATERIALS
8.1
Delivery of Documentation. NS8 shall at its expense deliver to
Licensee at least ten
(10) days prior to the
date of the
commencement of
the
commercial launch
of Music Manager a copy of any supporting documents,
information or other material (the "Documentation") relating to the
Software and
the Music Manager that is, in the opinion of NS8, necessary to
allow Licensee to
successfully operate
the Software and the Music Manager. 8.2 Title Over
Documentation & Software. Each copy of any Software or
Documentation provided to
Licensee under this License is the property of NS8, subject only to the limited
right of use expressly permitted herein, and Licensee shall not
permit any lien,
charge, pledge, mortgage or encumbrance to attach thereto. 8.3 No
Modifications.
Licensee shall not
make, or authorize any
others to make, any
modifications,
deletions, alterations or additions in or to any NS8 Software or
program without
the prior written consent of NS8. Without limiting the foregoing,
Licensee shall
not delete the copyright notice of any NS8 Software or program or
from any other
materials supplied by NS8 hereunder.
9 PROTECTION
& SECURITY
9.1
General. Licensee shall put in place fully
secure and
effective,
stringent and robust
security systems and technologies to prevent theft,
pirating and
unauthorized
copying
or duplication of any Software or
Documentation or program and such security systems, procedures and technologies
shall be no less
stringent or robust
than those which
Licensee employs
with
respect to software from other sources or providers. 9.2 No Other
Use Permitted.
Licensee shall not use or authorize any use of any Software
provided by NS8
for
any purpose other than as is expressly permitted herein.
9.3
Insurance. NS8 shall take out and, until all of its obligations
under
this Agreement have been performed or otherwise discharged, maintain insurance
as set forth below
(a)
workers'
compensation,
as required by applicable laws, and
employer's liability
for all employees performing work under this
Agreement; and
(b)
commercial
general liability of not less than One Million US
Dollars (US$1,000,000) per occurrence, for both bodily injury and
property damage.
9.3.1 The terms of all such insurance and the identity of the insurers
shall be subject to the approval of Licensee (not to be
unreasonably
withheld)
and shall (a) provide that cancellation, non-renewal or material
modification
shall not be
effective without thirty (30) days prior written notice to
Licensee, (b) be primary, and not contributing, with any insurance
maintained by
Licensee, and (c) not
have a deductible
greater than One Thousand US Dollars
(US$1,000) per loss. NS8 shall provide to Licensee all certificates
of insurance
and, upon request by Licensee, copies of all insurance
policies.
9.3.2 NS8 shall comply with all terms and conditions of the
policies that
it is required to maintain under this Agreement and with all
requirements
of
insurers in connection with the settlement of claims, the recovery
of losses and
the prevention
of accidents. NS8 shall bear the cost of all excesses,
deductibles, exclusions or limitations applying under such
insurance.
9.3.3 If NS8 fails to maintain the insurance required, then Licensee may
procure and maintain any such insurance, pay the requisite premiums and deduct
the amount paid from
any monies due NS8, or recover the same as a debt from NS8
or forfeit any surety.
9.4
Source Code Escrow.
NS8 shall place,
commencing
as of the date of
acceptance of the Software, the source code and Documentation (together with
updates to either as and when issued) for the Software with an
independent third
party escrow holder,
and name Licensee as a beneficiary of said escrow. All of
the matter held in escrow shall be released to Licensee on conditions that
include, but are not necessarily limited to, NS8 becoming bankrupt
or insolvent,
NS8 ceasing to do business in the ordinary course and the failure
of NS8 to meet
its obligations with respect to the Software, including a breach of its
support
and maintenance
services obligations. The fees and charges of maintaining
Licensee as a beneficiary of the escrow shall be borne by
Licensee. No
license
fee is payable to NS8 for the source code deposited into the
escrow.
10
STATEMENTS AND REPORTS
10.1
Reports to Accompany Payments. At the time that any payment is
made
to NS8 hereunder, such payment shall be accompanied or preceded by
an accounting
statement setting forth the following calculations and information
in respect of
such payment: (a) the actual number of Subscribers for each
relevant period, (b)
the actual number of Subscriber Transactions for the quarterly
relevant period,
(c) the actual Retail Price charged and received for each Subscriber
Transaction, and NS8 Revenue Share for each relevant period.
11
AUDIT
11.1
NS8's Audit Rights.
Licensee shall keep
and maintain complete
and
accurate books of
account and
records at its
principal place of business in
connection with each
of the Subscriber
Transaction
pertaining
to Licensee's
compliance with the terms hereof, including, without limitation, copies of the
statements and other
information
referred to in Article
10 hereof. NS8
shall
have the right,
no more than once in any year of the Term, at NS8's cost
(subject to the
penultimate sentence
of this Section 11.1), upon three (3)
Business Days' prior written notice and during business hours to
audit and check
(either itself or by an independent third party) at Licensee's
principal place
of business,
Licensee's
books and records
pertaining
to the accuracy of
the
statements and other financial information delivered to NS8 by
Licensee and the
amount of the
NS8 Revenue Share paid or payable hereunder and to ensure
compliance with
Article 10 hereof. Any
statement or payment provided to NS8
which is not challenged by written notice to Licensee setting forth
the specific
grounds on which NS8
reasonably
believes such statement or payment to be
incorrect, shall be deemed to have been accepted by NS8 after
twelve (12) months
after the date of such statement or payment, and NS8 shall thereafter
