DIRECTOR AGREEMENT
 
This Director Agreement, (the “Agreement”) dated as of March 8, 2005 by and
between Dwango North America Corp., a company incorporated under the laws of the
state of Nevada (the “Company”), with its principal executive offices in
Seattle, Washington, and Victor Cohn, residing at 59 Lower Shad Road, Pound
Ridge, New York 10576 (the “Director”).
 
WHEREAS, the Company wishes to cause Director to be elected by the Company, and
Director wishes to be elected, as a member of the Board of Directors of the
Company (the “Board”).
 
WHEREAS, upon Director’s election to the Board, the Company wishes to cause
Director to be elected, and the Director wishes to be elected, as the Chairman
of the Board.
 
WHEREAS, if the Director is elected by the Company as both a member of the Board
and the Chairman of the Board, the parties wish to provide in this Agreement for
the rights, obligations duties and powers of Director.
 
NOW, THEREFORE, in consideration of the mutual undertakings and premises herein
contained, the parties hereto hereby agree as follows:
 

1.  
Directorship.

 

1.1  
The Company hereby agrees to cause the election of Director, and Director hereby
agrees if elected by the Company, to serve as a member of the Board.

 

1.2  
The Company hereby agrees to cause the election of Director, and Director hereby
agrees if elected by the Company, to serve as the Chairman of the Board.
Director shall not be an employee of the Company.

 

1.3  
In serving as a member and the Chairman of the Board, Director acknowledges and
agrees that during the term hereof acting as a member and the Chairman of the
Board, Director shall comply with all applicable laws and regulations and the
Company’s Articles of Incorporation, By-laws or other governing instruments or
contractual commitments of the Company which govern or control in any way
Director’s rights, powers, duties or responsibilities as a member and Chairman
of the Board.

 

1.4  
Notwithstanding anything to the contrary in this Section 1, Director may be
removed as a director and/or as Chairman of the Board at any time in accordance
with applicable law and the Company’s Certificate of Incorporation and Bylaws,
and no provision of this Agreement shall be construed to require the Company to
cause Director to remain on the Board or to continue to serve as Chairman of the
Board for any particular length of time. Likewise, Director may resign at any
time.

 

2.  
Scope of Duties and Powers.

 

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2.1  
Director shall, in his capacity as the Chairman of the Board, preside at all
meetings of the Board and at all meetings of the stockholders and shall exercise
and perform such other powers and duties as from time to time may be assigned by
the Board or prescribed by the By-laws of the Company. In furtherance, and not
in limitation, of the foregoing, Director shall spend at least one business day
per quarter at the headquarters of the Company in Seattle, Washington and shall
make himself available for and be responsive to telephone calls and e-mails
regarding the business of the Company.

 

2.2  
Director shall attend (in-person) at least 4 meetings of the Board per year.
Director shall also be available on an as needed basis for telephonic meetings
of the Board.

 

2.3  
Director shall participate in the selection by the Company of its, among others,
auditors (to the extent he becomes a member of the audit committee) and legal
counsel.

 

3.  
Compensation.

 
In consideration of the services provided to the Company by Director hereunder,
the Company shall compensate Director as follows:
 

3.1  
While Director serves as a member of the Board, the Company shall pay Director
$6,000 per month (“Director’s Fee”). In addition, the Company shall pay Director
for (i) his attendance in person at meetings of the Board $500 per meeting and
(ii) his participation in telephonic meetings of the Board $250 per meeting,
each as may be adjusted pursuant to the Company’s Director Compensation Plan in
effect from time to time.

 

3.2  
It is agreed by Director and the Company that the Company shall pay all expenses
incurred by Director in the discharge of Director’s duties under this Agreement,
including, but not limited (a) to first class round-trip air travel to and from
Seattle, Washington and (b) reasonable attorney’s fees in connection with this
Agreement. The Company shall reimburse Director for expenses incurred by
Director in connection with the performance of Director’s duties and
responsibilities hereunder, provided that such expenses are supported with
customary receipts and expense reports.

 

3.3  
Options.

 

(a)  
Pursuant to the Company’s 2003 Equity Incentive Plan (the “Plan”), Director
shall be granted an option to purchase 300,000 shares of common stock of the
Company upon his initial election to the Board at an exercise price equal to
fair market value (“FMV”) on the date of grant determined in accordance with the
provisions of the Plan. Director’s right to exercise the option shall vest
one-twelfth (1/12) on the date of grant, and one-twelfth on each three month
anniversary of the date of grant until vested in full. This grant shall be in
lieu of any grant to which Director would otherwise be entitled upon election to
the Board.

 
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(b)  
Director shall be entitled to participate, except as set forth in subsection (a)
above with respect to a grant upon election to the Board, in any director
compensation plan of the Company applicable to non-employee directors generally
which is effective during the term of this Agreement. Notwithstanding the
foregoing, the Company shall not be required to maintain any such plan and may
alter the terms and conditions of such plan at any time and from time to time in
its sole discretion.

 

3.4  
For the purposes of this Agreement, a “Change of Control Event” shall be the
occurrence of a single shareholder (or beneficial owner) or an affiliated group
of shareholders (or owners) acquiring more than 50% of the then outstanding
shares of capital stock of the Company entitled to vote in the election of
directors or otherwise acquiring effective control of the Company. In the event
of a Change of Control Event, Director’s unvested and unexercised options (set
forth in Section 3.3 above) shall immediately vest and become exercisable.

 

3.5  
Immediately upon Director’s initial election to the Board, the Company shall
consult with Marsh & McLennan or a similar nationally recognized insurance
broker (“Insurance Consultant”) to consider the appropriateness of the coverage
limitation on the Company’s directors and officers insurance policy (“D&O
Policy”). The Board may, but shall not be required to, increase the Company’s
D&O Policy coverage limitation as recommended by such Insurance Consultant. The
Company shall bear all costs related to the foregoing.

 

3.6  
The Company shall make available a secretary at its principal executive offices
for the use of Director in connection with the discharge of Director’s duties
under this Agreement and shall bear all costs related thereto.

 

3.7  
The Company shall make available an office at its principal executive offices
for Director’s use when in Seattle, Washington in connection with the discharge
of Director’s duties under this Agreement and shall bear all costs related
thereto.

 

4.  
Indemnification. See Appendix A hereto which is made a part of this Agreement to
the same extent as if it had been set forth verbatim herein.

 

5.  
Terms and Termination. This Agreement shall become effective on the date hereof
and shall continue in full force and effect so long as Director remains a member
of the Board.

 

6.  
Miscellaneous.

 

6.1  
Any notice under this Agreement shall be in writing and shall be deemed to have
been duly given for all purposes when delivered in person or transmitted by
facsimile transmission with confirmed receipt to the respective parties, or
three days after dispatch by certified mail, postage prepaid, addressed to the
parties at the addresses set forth below or to such other address of which
notice as aforesaid has actually been received.

 
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If to Director:
Mr. Victor Cohn
59 Lower Shad Road
Pound Ridge, New York 10576
and
305 East 63rd Street
New York, New York 10021
Facsimile: (914) 764-0769
with a copy to:
Thelen Reid & Priest LLP
875 Third Avenue
New York, New York 10022
Facsimile: (212) 603-2001
Attention: Willie Dennis, Esq.
If to Company:
Dwango North America Corp.
2211 Elliott Avenue, Suite 601
Seattle, Washington 98121
Facsimile: (206) 832-0601
Attention: Mr. J. Paul Quinn
with a copy to:
Moomjian & Waite, LLP
100 Jericho Quadrangle
Suite 225
Jericho, NY 11753
Facsimile: (516) 937-5050
Attention: Gary T. Moomjian, Esq.
 
 

6.2  
Other than the term and conditions set forth in the Articles of Incorporation,
By-laws or other governing instruments of the Company, this Agreement is the
entire Agreement between the parties with respect to the subject matter hereof,
and supersedes all prior understandings, agreements and discussions between
them, written or oral, with respect to such subject matter.

 

6.3  
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors (including
any direct or indirect successor by purchase, merger, consolidation or otherwise
to all or substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives. The provisions
of Article 4 of this Agreement shall continue in effect regardless of whether
Director continues to serve as a director of the Company or of any other
enterprise at the Company's request.

 
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6.4  
The provisions of this Agreement shall be severable if any of the provisions
hereof (including any provision within a single section, paragraph or sentence)
are held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable to the
fullest extent permitted by law.

 

6.5  
This Agreement shall not be modified or amended except by a written instrument
signed by the parties hereto. No waiver or failure to act with respect to any
breach or default hereunder, subsequent breach or default, whether of similar or
different nature.

 

6.6  
This Agreement may not be assigned without the written consent of the other
party.

 

6.7  
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

        DWANGO NORTH AMERICA CORP.  
   
   
  By:   /s/ J. Paul Quinn  

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Name: J. Paul Quinn   Title: Chief Financial Officer        /s/  Victor Cohn  
Victor Cohn

 
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APPENDIX A -- INDEMNIFICATION
 

1.1  
Certain Definitions.

 

(a)  
Claim: shall mean any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether conducted by the Company or
any other party, that Director in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.

 

(b)  
Expenses: shall include reasonable attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in, any Claim relating to any
Indemnifiable Event.

 

(c)  
Indemnifiable Event: shall mean any event or occurrence related to the fact that
Director is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, trustee, agent or fiduciary of another corporation of any
type or kind, domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or not done by
Director in such capacity. Without limitation of any indemnification provided
hereunder, Director serving (i) another corporation, partnership, joint venture
or trust of which 10 percent or more of the voting power or residual economic
interest is held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or any entity referred to in clause (i), in any
capacity shall be deemed to be doing so at the request of the Company.

 

(d)  
Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting
of directors who are not parties to the particular Claim with respect to which
Director is seeing indemnification, or (ii), if such a quorum is not obtainable
or, even if obtainable, if a quorum of disinterested directors so directs, (A)
the Board of Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the applicable
standard of conduct set forth this Agreement has been met by the Director or (B)
the shareholders upon a finding that the Director has met the applicable
standard of conduct referred to in clause (ii)(A) of this definition.

 

1.2  
Basic Indemnification Arrangement. If Director was, is or becomes at any time a
party to, or witness or other participant in, or is threatened to be made a
party to, or witness or other participant in, a Claim by reason of (or arising
in part out of) an Indemnifiable Event, the Company shall indemnify Director to
the fullest extent permitted by law as soon as practicable but in any event no
later than 30 days after written demand is presented to the Company, against any
and all Expenses, judgments, fines (including excise taxes assessed on Director
with respect to an employee benefit plan), penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with, or in respect of, such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim. If so requested by
Director, the Company shall advance (within five business days of such request)
any and all Expenses to Director (an “Expense Advance”). Notwithstanding
anything in this Agreement to the contrary, (i) Director shall not be entitled
to indemnification pursuant to this Agreement if a judgment or other final
adjudication adverse to the Director establishes that Director's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and, in either case, were material to the cause of action so adjudicated and
(ii) Director shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Director against the Company
or any director or officer of the Company unless the Company has joined in or
consented to the initiation of such Claim.

 
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1.3  
Payment. Notwithstanding the provisions of Section 1.2, the obligations of the
Company under Section 1.2 (which shall in no event be deemed to preclude any
right to indemnification to which Director may be entitled under Section 78.7502
of the Nevada Revised Statutes (“NRS”)) shall be subject to the condition that
the Reviewing Party shall have authorized such indemnification in the specific
case by having determined that Director is permitted to be indemnified under the
applicable standard of conduct set forth in Section 1.2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with respect to
a Claim and agrees to use its best efforts to facilitate a prompt determination
by the Reviewing Party with respect to the Claim. Director shall be afforded the
opportunity to make submissions to the Reviewing Party with respect to the
Claim. The obligation of the Company to make an Expense Advance pursuant to
Section 1.2 shall be subject to the condition that, if, when and to the extent
that the Reviewing Party determines that Director would not be permitted to be
so indemnified under Section 1.2 and applicable law, the Company shall be
entitled to be reimbursed by for all such amounts theretofore paid; provided,
however, that if Director has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Director should be
indemnified under applicable law, any determination made by the Reviewing Party
that Director would not be permitted to be indemnified under applicable law
shall not be binding and Director shall not be required to reimburse the Company
for any Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed). If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Director substantively would not be permitted to
be indemnified in whole or in part under applicable law, Director shall have the
right to commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper seeking an
initial determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Director.

 
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1.4  
Indemnification for Additional Expenses. The Company shall indemnify Director
against any and all expenses (including reasonable attorneys' fees) and, if
requested by Director, shall (within five business days of such request) advance
such expenses to Director, which are incurred by Director in connection with any
claim asserted or action brought by Director for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other agreement
or the By-laws or Articles of Incorporation of the Company now or hereafter in
effect relating to Claims for Indemnifiable Events and/or (ii) recovery under
any directors' and officers' liability insurance policies maintained by the
Company, regardless of whether Director ultimately is determined to be entitled
to such indemnification, advance expenses payment or insurance recovery, as the
case may be.

 

1.5  
Partial Indemnity, Etc. If Director is entitled under any provision of this
Agreement or the By-laws or Articles of Incorporation of the Company now or
hereafter in effect to indemnification by the Company for some or a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Director for the portion thereof to which Director is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Director has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including dismissal without
prejudice, Director shall be indemnified, to the extent permitted by law,
against all Expenses incurred in connection with such Indemnifiable Event. In
connection with any determination by the Reviewing Party or otherwise as to
whether Director is entitled to be indemnified hereunder, the burden of proof
shall, to the extent permitted by law, be on the Company to establish that
Director is not so entitled.

 

1.6  
Nonexclusivity, Etc. The rights of the Director hereunder shall be in addition
to any other rights Director may have under the By-laws of the Company, the
Articles of Incorporation of the Company, the NRS or otherwise. To the extent
that a change in the NRS (whether by statue or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the
By-laws of the Company, the Articles of Incorporation of the Company and this
Agreement, it is the intent of the parties hereto that Director shall enjoy by
this Agreement the greater benefits so afforded by such change.

 

1.7  
Period of Limitations. No legal action shall be brought and no cause of action
shall be asserted by or on behalf of the Company or any affiliate of the Company
against Director, Director's spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two-year period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such
cause of action, such shorter period shall govern.

 
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