Exhibit 10.38


 


ADD ON CONTENT ADDENDUM


TO CONFIDENTIAL LICENSE AGREEMENT


FOR THE WII CONSOLE


 


THIS ADD ON CONTENT ADDENDUM (“Addendum”) to the CONFIDENTIAL LICENSE
AGREEMENT FOR THE WII CONSOLE (Western Hemisphere) (“Agreement”) is entered
into between Nintendo of America Inc. (“NOA”) and THQ Inc. (“LICENSEE”), and
shall be deemed a part of the Agreement. 
NOA and LICENSEE agree as follows:


 


1.             BACKGROUND


 


1.1           The parties
previously entered into the Agreement, which Agreement, among other things,
restricts LICENSEE from developing additional content for Games for download by
consumers, without the express written approval of NOA.


 


1.2           NOA now desires to
offer LICENSEE the opportunity to create additional new content for Games for
download by customers through NOA’s Wii Network Services.


 


1.3           LICENSEE desires to
develop additional new content for Games, and have NOA offer that new content
to customers for download through the Wii Network Services.


 


1.4           NOA desires to
market, distribute and sell additional new content for Games through the Wii
Network Services.


 


2.             DEFINITIONS


 


All capitalized terms
used in this Addendum that are not otherwise defined herein shall have the
meaning set forth in the Agreement.  The
following additional definitions specifically apply to this Addendum:


 


2.1           “Add On Content” means any new
content for Games developed by or for LICENSEE and Distributed by NOA.  “Add On Content” shall be deemed a part of a
Game, as defined in the Agreement.


 


2.2           “Add On Content Final Title Sheet”
means NOA’s form that is completed and submitted by LICENSEE with each proposed
Add On Content.


 


2.3           “Distribute”, “Distributed” or “Distribution”
means any offer of Add On Content to a customer by NOA through the Wii Network
Services.


 


2.4           “E-Commerce Library Programming
Guidelines for Wii” means the current guidelines specific to the incorporation
of e-commerce functionality in Games to allow for the Sale, Distribution, and
download of Add On Content.  The
E-commerce Guidelines shall be deemed a part of the Guidelines, as defined in
the Agreement.


 


2.5           “Instruction Manuals” means
electronic manuals or other documents, in such form as may be required by NOA,
that describe how to use Add On Content and that set forth any necessary
warnings related to such use.


 


2.6           “Licensee
Intellectual Property Rights” means Proprietary Rights owned or licensed by
LICENSEE (excluding any Intellectual Property Rights) in or relating to the
Game or Add On Content.


 

















 


2.7           “Performance
Threshold” means, for each specific piece of Add On Content, the minimum number
of Sales or other criteria required to be satisfied for specific Add On Content
before LICENSEE will be eligible to be paid a Royalty for that Add On Content.


 


2.8           “Royalty” or “Royalties”
means the amounts payable to LICENSEE by NOA in accordance with this Addendum.


 


2.9           “Sale” means each
redemption by a customer of Wii Points (or the actual purchase price to
download content, should NOA allow purchases by other than Wii Points), which
enables such customer to download specific Add On Content (collectively, “Sales”).  “Sell” or “Sold” shall mean the completion of
each such Sale through NOA.


 


2.10         “System Updates” mean
upgrades, bug fixes, or additional features that modify the operating system of
the Wii console and/or are designed to optimize or enhance the operation,
performance, or security of the Wii Network Services or the Wii console.


 


2.11         “Wii Points” means
the points which customers purchase from NOA and its subsidiaries through means
such as the Wii Shop Channel and points cards sold or distributed by NOA’s
promotional partners and authorized retailers and distributors, and that may be
redeemed by customers to download Add On Content or other content.


 


2.12         “Wii Shop Channel”
means the service provided by NOA or Nintendo that is associated with the Wii
console (or any successor consoles) whereby customers, through an Internet
connection, can download content for such console upon a Sale to a customer.


 


3.             GRANT OF
LICENSE; RESTRICTIONS


 


3.1           Grant of Development
License to LICENSEE.  Subject to the
terms and conditions of the Agreement, NOA grants to LICENSEE, during the Term
and throughout the Territory, a nonexclusive, nontransferable, limited license
to use the Intellectual Property Rights to develop Add On Content (or have Add
On Content developed on LICENSEE’s behalf) for Distribution and Sale solely by
NOA.


 


3.2           Grant of License
to NOA.  Subject to the terms and
conditions of the Agreement, LICENSEE grants to NOA, during the Term and
throughout the Territory, a license in and to the Add On Content, and all of
LICENSEE’s Proprietary Rights associated therewith, sufficient to permit NOA, its
subsidiaries or third parties working on NOA’s behalf, to advertise, market,
Distribute and Sell the Add On Content in object code form.  NOA shall not be in breach of this license
grant if it advertises, markets, Distributes or Sells to any customer
representing him or herself to be within the Territory, even if such customer
is not in fact within the Territory.


 


3.3           Restrictions and
Prohibitions.  NOA will not (i) modify,
Distribute or Sell Add On Content or all or any part of the Licensee
Intellectual Property Rights, except as permitted by this Agreement; or (ii) reverse
engineer or assist in the reverse engineering of all or any part of the Add On
Content.  LICENSEE will not (I) reverse
engineer or assist in the reverse engineering of all or any part of the
Intellectual Property Rights; or (II) use the Intellectual Property Rights
for any purpose other than that set forth in the Agreement and in Subsection
3.1 of this Addendum ****.


 


4.             DEVELOPMENT;
APPROVALS; UPGRADES; DISTRIBUTION; SUPPORT


 


4.1           Responsibility
for Add On Content.  LICENSEE is
solely responsible for development, testing, quality, content, operation and
support of Add On Content, and must comply with any Guidelines made available
to LICENSEE by NOA in connection therewith. 
Failure to comply with any Guidelines shall be a breach of this
Agreement.  LICENSEE shall review all Add
On Content prior to submission to NOA, and shall ensure that all Add On Content
submitted to NOA by LICENSEE for Distribution: (i) is free






* Confidential portion
omitted and filed separately with the Securities and Exchange Commission.


 


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of bugs or other operational defects or errors that have a material
adverse effect on the use and/or enjoyment of the applicable Game, (ii) does
not contain any third party software (including free or open source software)
that: (a) creates, or purports to create, obligations on NOA with respect
to such software; (b) grants, or purports to grant, to any third party any
rights or immunities in or to the Add On Content or the Intellectual Property
Rights; or (c) causes the Add On Content or the Intellectual Property
Rights to be subject to any licensing terms or obligations that would require
the Add On Content or the Intellectual Property Rights to be disclosed or
distributed, whether or not in source code form, to be licensed for the purpose
of making derivative works or to be redistributed free of charge, and (iii) does
not include material that would change the existing ESRB rating or descriptors
for the Game.  To the extent an
Instruction Manual is required by the Guidelines, LICENSEE must include an
Instruction Manual with its submission.


 


4.2           Security
Technology, System Updates and Notifications.  In its sole discretion, and without Notice to
LICENSEE, NOA or Nintendo may add Security Technology, System Updates, and
trademark, copyright or customer notifications to Add On Content or Instruction
Manuals; provided, however, any such addition by NOA will not serve to release
LICENSEE from any obligation under the Agreement or under applicable laws, rules or
regulations.  NOA may in addition require
LICENSEE at LICENSEE’s sole expense to update its Add On Content from time to
time to (i) comply with any new Wii Network Services or Wii console
requirements or Guidelines, or (ii) fix bugs or other operational defects
or errors in the Add On Content in accordance with NOA’s then-current
Guidelines.


 


4.3           Submission of
Completed Add On Content.  When
development and testing of proposed Add On Content has been completed, LICENSEE
will submit such proposed Add On Content to NOA for approval, and shall provide
along with each submission a completed Add On Content Final Title Sheet for
such proposed Add On Content, and such additional information or documentation
as deemed necessary by NOA.


 


4.4           No Obligation to
Market, Distribute or Sell. LICENSEE acknowledges that its development of
proposed Add On Content is at its sole risk. 
NOA is under no obligation to advertise, market, Distribute or Sell
specific Add On Content and thereby incur any Royalty or other financial
obligation to LICENSEE.  If NOA elects to
Distribute any Add On Content, the commencement date of such Distribution, the
length of time, and the countries within the Territory in which it is
Distributed, shall be in NOA’s sole discretion, provided, however, LICENSEE may
terminate NOA’s right to Distribute or Sell specific Add On Content, upon
thirty day’s prior Notice to NOA.  NOA
may at any time and for any reason (i) remove Add On Content from the Wii
Network Services for all or a portion of the Territory without liability to
LICENSEE, other than payment of any Royalties that may be due under Section 5
of this Addendum for Sales that occurred prior to such removal, and (ii) restore
Add On Content to the Wii Network Services for all or a portion of the
Territory during the Term (and in such case shall continue to pay to LICENSEE
any Royalties due under Section 5 of this Addendum).


 


4.5           Technical Support.  LICENSEE shall provide all necessary
technical support to NOA relating to the Add On Content in order to enable NOA
to market, Distribute and Sell Add On Content.


 


4.6           Customer Support.  LICENSEE is solely responsible for all
customer support for the Add On Content. 
Notwithstanding the foregoing, LICENSEE acknowledges that NOA shall have
the right to post Instruction Manuals and other information relating to Add On
Content on NOA websites for customer support purposes.


 


5.             PRICE; ROYALTIES


 


5.1           Price.  NOA shall have sole discretion to (i) determine
the number of Wii Points a customer must redeem to download specific Add On
Content (or the purchase price, if Wii Points are not used); (ii) change
the number of Wii Points or the purchase price from time to time; and (iii) require
a different number of Wii Points or purchase price in order to redeem specific
Add On Content in different countries within the Territory.  LICENSEE may suggest to NOA the number of Wii
Points (or the purchase price, if Wii Points are not used) at which to offer
Add On Content, although NOA has no obligation to


 


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accept such suggestion.  If LICENSEE
has suggested a price of 0 Wii Points, and NOA does set a price of 0 Wii
Points, LICENSEE acknowledges and agrees that it will reimburse NOA at NOA’s
request for any costs or taxes associated with no cost access to such Add On
Content.


 


5.2           Royalty.  Subject to this Section 5, and provided
the applicable Performance Threshold has been met for such Add On Content, NOA
will pay LICENSEE a Royalty on each Sale as follows:


 


****


 


5.3           Performance
Thresholds.  In order to help offset
NOA’s expenses incurred for quality assurance, lot check, Distribution, and
Sales, NOA’s payments to LICENSEE for each specific Add On Content Distributed
by NOA shall not begin unless and until LICENSEE meets the applicable
Performance Threshold for that specific Add On Content.


 


5.3.2        Applicable
Performance Thresholds are set forth at www.warioworld.com or such other
website as NOA may in the future designate. 
NOA may from time to time in its sole discretion modify Performance
Thresholds or add new Performance Thresholds, provided that NOA may not
increase any Performance Threshold for specific Add On Content after the date
such Add On Content is initially Distributed.


 


5.3.3        Once specific Add On
Content has reached the applicable Performance Threshold, Royalties will be due
for all Sales of such Add On Content (including all Sales made prior to
reaching the applicable Performance Threshold), and will be paid as provided in
Subsection 5.4 of this Addendum, without payment of interest.  In the event the Agreement or NOA’s right to
distribute specific Add On Content terminates before the applicable Performance
Threshold has been met for such Add On Content, no payment for such Sales will
be owed to LICENSEE.


 


5.4           Payments.  All Royalty payments from NOA to LICENSEE
shall be made by check or by electronic transfer, or such other means as may be
required by NOA from time to time, to the account listed in the Add On Content
Final Title Sheet for the initial Add On Content Distributed by NOA, or such
other account as LICENSEE may thereafter designate in a Notice to NOA.  LICENSEE may not offset against any amount
owed NOA any amounts payable pursuant to this Addendum.


 


5.5           Withholding Taxes.  LICENSEE acknowledges that Royalty payments
made to non-U.S. content providers may be subject to government-imposed
withholding or other taxes.  NOA will
withhold and pay such taxes on Royalty payments made by NOA under this
Agreement unless LICENSEE completes and submits to NOA all tax documents
required to eliminate or reduce such taxes in accordance with applicable tax
treaties.  LICENSEE acknowledges that, in
order to eliminate or reduce applicable taxes, such documents must be received
by NOA (Attn. Nintendo of America Inc. Tax Department, 4820 — 150th Ave. NE, Redmond, WA 98052) prior to NOA making
a Royalty payment hereunder, and if not received by the time a Royalty payment
is otherwise due, such Royalty payment will be subject to withholding of such
taxes.  In the event taxes are withheld,
NOA will provide LICENSEE copies of relevant tax documents evidencing
withholding of such taxes.


 


5.6           Royalty Offsets.


 


5.6.1        Refunds.  NOA shall have the right in its sole
discretion to refund Wii Points to customers in respect of any Sale in the
event of a customer complaint or unauthorized transaction relating to such
Sale, and to offset the corresponding value of such refund amounts against any
Royalties that would otherwise be due hereunder.


 


5.6.2        Other.  NOA may offset against Royalties any amounts
which LICENSEE is required to pay NOA under the Agreement.






* Confidential portion
omitted and filed separately with the Securities and Exchange Commission.


 


 


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5.7           Claims.  Without prejudice to any other rights and
remedies of NOA, in the event any Claim is made that may be subject to LICENSEE’s
indemnification obligations under Section 10 of the Agreement, NOA may in
its sole discretion withhold payment to LICENSEE until such time as the Claim
has been resolved, and any amounts due NOA have been fully paid or any Royalty
offsets relating to such amounts have been fully determined.


 


5.8           Royalty Reports.  NOA will furnish LICENSEE with quarterly
Royalty reports for any calendar quarter in which Sales took place, and,
provided the applicable Performance Threshold has been met, will pay any
Royalties due within **** of the close of such calendar quarter, provided,
however, if any payment due is less than ****, NOA may in its sole discretion
delay making such payment until the earlier of the calendar quarter immediately
following:  (i) that calendar
quarter in which Royalties equal that amount or greater, or (ii) the
expiration of the Term.


 


6.             MARKETING,
ADVERTISING, AND CUSTOMER SUPPORT


 


6.1           Marketing.


 


6.1.1        By NOA.  NOA may in its sole discretion and at its expense
(i) advertise or list Add On Content on websites operated by or on behalf
of NOA, on the Wii Network Services, and in other online, media or print
marketing channels, and (ii) include trailers, screen shots, artwork,
sound effects, and other information relating to the Add On Content in NOA
periodicals (issued by NOA or through its licensees), Wii channels, and other
advertising, promotional or marketing materials that promote Add On Content,
the Wii Network Services, or other NOA products, services or programs.  NOA shall submit to LICENSEE samples of
proposed marketing materials for LICENSEE’s review and approval.  LICENSEE shall within **** of receipt approve
or disapprove of such samples.  NOA shall
not use any marketing materials without obtaining LICENSEE’s approval, ****.
NOA may from time to time reasonably request, and LICENSEE shall provide to NOA
at LICENSEE’s expense, reference materials such as character print samples and
other materials in connection with these advertising and promotional activities.


 


6.1.2        By LICENSEE.  Subject to Subsection 7.1 of the Agreement,
LICENSEE may in its sole discretion and at its expense advertise and market Add
On Content.


 


6.2           Royalty-Free
Copies.  NOA shall be provided ****
complimentary downloads of Add On Content, which may be used by its employees
or media for evaluation purposes, without any payment of Royalties or other
amounts to LICENSEE.


 


7.             ADDITIONAL
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS


 


7.1           LICENSEE’s
Representations and Warranties. 
LICENSEE represents and warrants that, except for any Intellectual
Property Rights, System Updates or notifications included by NOA or Nintendo in
the Add On Content: (i) LICENSEE is either the sole owner of all right,
title and interest in and to the Add On Content or Marketing Materials
(including but not limited to any music, trademarks, service marks or other
Proprietary Rights contained in or relating to the Add On Content), or has at
LICENSEE’s expense obtained all necessary third party approvals in writing (including
but not limited to those of any music performance or collecting licensing
societies), to grant to NOA the rights set forth in this Addendum throughout
the Territory and for the duration of the Term; (ii) neither the Add On
Content nor the Licensee Intellectual Property Rights violate or infringe any
Proprietary Rights of any third party anywhere in the Territory; (iii) the
Add On Content will at the time delivered to NOA be free of any bugs or other
operational defects or errors that materially affect Game play; (iv) nothing
in the Add On Content would change the original ESRB rating or descriptors for
the Game; (v)  the Add On Content does not contain any material that
is libelous or defamatory or that discloses private or personal matters concerning
any person, or any computer virus, trojan horse, spyware or other
contaminating, malicious or destructive feature; (vi) the Add On Content
does not contain any third party software (including free or open source






* Confidential portion
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software) that: (a) creates, or purports to create, obligations on
NOA with respect to such software; (b) grants, or purports to grant, to
any third party any rights or immunities in or to the Add On Content or the
Intellectual Property Rights; or (c) causes the Add On Content or the
Intellectual Property Rights to be subject to any licensing terms or
obligations that would require the Add On Content or the Intellectual Property
Rights to be disclosed or distributed, whether or not in source code form, to
be licensed for the purpose of making derivative works or to be redistributed
free of charge; and (vii) the Add On Content conforms with the requirements
of the Agreement, including but not limited to the Guidelines, and all
applicable laws, rules and regulations.


 


7.2           NOA’s Disclaimers.  TO THE MAXIMUM EXTENT PERMITTED BY LAW, NOA
(ON BEHALF OF ITSELF, NINTENDO, AND THEIR AFFILIATES, LICENSORS, SUPPLIERS AND
SUBCONTRACTORS) EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT TO THE
ADD ON CONTENT OR THE WII NETWORK SERVICE, EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A GENERAL
OR PARTICULAR PURPOSE.  LICENSEE
ACKNOWLEDGES THAT THE ADD ON CONTENT AND THE WII NETWORK SERVICE MAY BE
SUBJECT TO DISRUPTIONS, AND THAT NOA MAY DECIDE TO DISCONTINUE OR
TERMINATE ALL OR PART OF THE WII NETWORK SERVICE, INCLUDING BUT NOT
LIMITED TO THE WII SHOP CHANNEL, AT ANY TIME IN NOA’S SOLE DISCRETION AND
WITHOUT NOTICE TO LICENSEE.


 


7.3           INTELLECTUAL PROPERTY RIGHTS
DISCLAIMER.  TO THE MAXIMUM EXTENT
PERMITTED BY LAW, NOA (ON BEHALF OF ITSELF, NINTENDO, AND THEIR AFFILIATES,
LICENSORS, SUPPLIERS AND SUBCONTRACTORS) EXPRESSLY DISCLAIMS ALL
REPRESENTATIONS AND WARRANTIES CONCERNING THE SCOPE OR VALIDITY OF THE
INTELLECTUAL PROPERTY RIGHTS, AND EXPRESSLY DISCLAIMS ANY WARRANTY THAT THE
DESIGN OR DEVELOPMENT OF THE ADD ON CONTENT OR THE USE OF THE INTELLECTUAL PROPERTY
RIGHTS BY LICENSEE WILL NOT INFRINGE UPON ANY PATENT, COPYRIGHT, TRADEMARK OR
OTHER PROPRIETARY RIGHTS OF A THIRD PARTY. 
ANY WARRANTY THAT MAY BE PROVIDED IN ANY APPLICABLE PROVISION OF
THE UNIFORM COMMERCIAL CODE OR ANY OTHER COMPARABLE LAW, STATUTE OR
REGULATION GOVERNING COMMERCIAL ACTIVITY IS EXPRESSLY DISCLAIMED.  LICENSEE HEREBY ASSUMES THE RISK OF
INFRINGEMENT.


 


7.4           The representations and warranties
and disclaimers set forth in Subsections 7.1, 7.2 and 7.3 of this Addendum
shall apply with respect to Add On Content and not those representations,
warranties and disclaimers set forth in Subsections 9.1(c), 9.3 and 9.4 of the
Agreement.


 


8.             INDEMNIFICATION


 


All of the provisions set forth at Section 10 of the Agreement
shall apply equally to Add On Content, provided that LICENSEE’s indemnification
obligations set forth at Subsection 10.1(b) of the Agreement shall be
limited to  ****.


 


9.             TERM AND
TERMINATION


 


9.1           Term of Addendum.  This Addendum will commence on the earlier of
the date last signed by a party, or the date LICENSEE’s first Add On Content is
Distributed, and will continue for so long as the Agreement is in effect.  LICENSEE acknowledges that Add On Content
Sold at any time during the Term shall remain playable and may be re-downloaded
by customers for as long as they have their Wii console, even if the Agreement
has expired or been terminated, or NOA’s right to Distribute that specific Add
On Content has been terminated pursuant to Subsection 4.4 of this
Addendum.  NOA, may not, however,
Distribute or Sell any Add On Content after the Agreement has expired or been
terminated.






* Confidential portion
omitted and filed separately with the Securities and Exchange Commission.


 


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9.2           Termination of
Add On Content.  If LICENSEE
terminates NOA’s right to Distribute specific Add On Content pursuant to
Subsection 4.4 of this Addendum, such termination shall only terminate NOA’s
right to Distribute that specific Add On Content and shall not affect any right
that LICENSEE has granted to Distribute any other Add On Content or this
Addendum, which shall continue in full force and effect.


 


9.3           Survival.  Upon the expiration or termination of this
Addendum, provisions that by their nature are intended to survive such
expiration or termination shall so survive, including, without limitation:  Sections 2, 5, 7, 8 and 10 of this
Addendum in their entirety, and Subsections 3.3, 4.1, 4.2, 9.1, and 9.3 of
this Addendum.


 


10.          GENERAL PROVISIONS


 


10.1         References to “Licensed
Products”.  The parties agree that
the provisions related to Licensed Products set forth in the Agreement at
Subsections 2.11, 2.13, 2.23, 3.2, 4.2, 7.3, 7.4(c), 7.6, and 7.7, and Section 11
shall apply equally to Add On Content, and not just to the Licensed Products,
and that every reference to “Licensed Products” therein shall be deemed to
include Add On Content.


 


10.2         Confidential
License Agreement for the Wii Console. 
This Addendum shall be deemed to be a part of the Agreement and, except
as expressly modified by this Addendum, all of the terms and conditions of the
Agreement shall apply to this Addendum.


 


10.3         Application of
Other Agreements.  In the event
LICENSEE has entered into a WiiWare Content Development and Distribution
Agreement with NOA, the terms of this Addendum shall apply with respect to Add
On Content for Game discs, and the terms of the WiiWare Content Development and
Distribution Agreement shall apply with respect to Add On Content for WiiWare
games.


 


 


 


	
  NOA:

  	
   

  	
  LICENSEE:

  
	
  NINTENDO
  OF AMERICA INC.

  	
   

  	
  THQ
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
  Jacqualee
  J. Story

  	
   

  	
  Name:

  	
  Brian
  J. Farrell

  
	
  Title:

  	
  Executive
  VP, Administration

  	
   

  	
  Title:

  	
  President
  and CEO

  



 


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