Document:

Exhibit 10.4

 

EXECUTION
COPY

 

Confirmation
of OTC Warrant Transaction

 

	
  Date:

  	
   

  	
  February 5,
  2008

  
	
  To:

  	
   

  	
  AAR
  Corp. (“Counterparty”)

  
	
   

  	
   

  	
  1100 N. Wood Dale Road

  
	
   

  	
   

  	
  Wood Dale, Illinois 60191

  
	
   

  	
   

  	
  Attention: Richard J. Poulton, Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile No.: (630) 227-2039

  
	
   

  	
   

  	
  Telephone No.: (630) 227-2075

  
	
   

  	
   

  	
   

  
	
  From:

  	
   

  	
  Merrill
  Lynch Financial Markets, Inc. (“Dealer” or “MLFM”)

  
	
   

  	
   

  	
  4 World Financial Center 5th Floor

  
	
   

  	
   

  	
  New York, New York 10080

  
	
   

  	
   

  	
  Attention: Corporate Derivatives

  
	
   

  	
   

  	
  Facsimile No.: (212) 738-1069

  
	
   

  	
   

  	
  Telephone No.: (212) 449-6763

  

 

MLFM
Reference:

 

Dear Sir / Madam:

 

The purpose of this
letter agreement (this “Confirmation”)
is to confirm the terms and conditions of the above-referenced transaction
entered into among Counterparty, Dealer and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the “Agent”)
on the Trade Date specified below (the “Transaction”).  This
Confirmation constitutes a “Confirmation” as referred to in the Agreement
specified below.

 

The definitions and
provisions contained in the 2000 ISDA Definitions (the “Swap Definitions”) and the 2002 ISDA
Equity Derivatives Definitions (the “Equity
Definitions”  and,
together with the Swap Definitions, the “Definitions”), in each case as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the Swap
Definitions and the Equity Definitions, the Equity Definitions will govern, and
in the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. References herein to a “Transaction”
shall be deemed to be references to a “Share Option Transaction” for the
purposes of the Equity Definitions and to a “Swap Transaction” for the purposes
of the Swap Definitions. For purposes of this Transaction, “Warrant Style”, “Warrant
Type”, “Number of Warrants” and “Warrant Entitlement” (each as defined below)
shall be used herein as if such terms were referred to as “Option Style”, “Option
Type”, “Number of Options” and “Option Entitlement”, respectively, in the
Definitions.

 

This Confirmation
evidences a complete binding agreement between you and us as to the terms of
the Transaction to which this Confirmation relates. This Confirmation
(notwithstanding anything to the contrary herein), shall be subject to, and
form part of, an agreement in the 2002 form of the ISDA Master Agreement (the “Master Agreement”  or “Agreement”)
as if we had executed an agreement in such form (but without any Schedule and
with elections specified in the “ISDA Master Agreement” Section of this
Confirmation) on the Trade Date. In the event of any inconsistency between the
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of this Transaction. The parties hereby agree that the
Transaction evidenced by this Confirmation shall be the only Transaction
subject to and governed by the Agreement.

 

The terms of the
particular Transaction to which this Confirmation relates are as follows:

 

OTC Warrant Confirmation (2016)

 

 

General
Terms:

 

	
  Trade Date:

  	
  February 5, 2008

  
	
   

  	
   

  
	
  Effective Date:

  	
  February 11, 2008
  subject to cancellation of the OTC Warrant Transaction prior to
  5:00 p.m. (New York City time) on such date by the Counterparty. In the event of such cancellation, any
  payments previously made hereunder, including the Premium, shall be returned
  to the person making such payment. In addition, Counterparty shall reimburse
  Dealer for any costs or expenses (including market losses) relating to the
  unwinding of its hedging activities in connection with the Transaction
  (including any loss or cost incurred as a result of its terminating,
  liquidating, obtaining or reestablishing any hedge or related trading
  position).

  
	
   

  	
   

  
	
  Warrant Style:

  	
  European

  
	
   

  	
   

  
	
  Warrant Type:

  	
  Call

  
	
   

  	
   

  
	
  Seller:

  	
  Counterparty

  
	
   

  	
   

  
	
  Buyer:

  	
  Dealer

  
	
   

  	
   

  
	
  Shares:

  	
  Shares of Common Stock,
  $1.00 par value, of Counterparty (Security Symbol: “AIR”).

  
	
   

  	
   

  
	
  Number of Warrants:

  	
  2,811,160

  
	
   

  	
   

  
	
  Daily Number of
  Warrants:

  	
  For any day, the
  unexercised Number of Warrants on such day divided
  by the remaining number of Expiration Dates (including such day)
  and rounded down to the nearest whole number, with the balance of the Number
  of Warrants exercised on the final Expiration Date.

  
	
   

  	
   

  
	
  Warrant Entitlement:

  	
  One (1) Share per
  Warrant

  
	
   

  	
   

  
	
  Strike Price:

  	
  $48.825

  
	
   

  	
   

  
	
  Premium:

  	
  $18,790,000

  
	
   

  	
   

  
	
  Premium Payment Date:

  	
  The Effective Date; provided
  that no cancellation of the Transaction has occurred prior to 5:00 p.m.
  (New York City time) on such date by the Counterparty.

  
	
   

  	
   

  
	
  Exchange:

  	
  New York Stock
  Exchange, Chicago Stock Exchange

  
	
   

  	
   

  
	
  Related Exchange(s):

  	
  All Exchanges

  
	
   

  	
   

  
	
  Full Exchange Business
  Day:

  	
  A Scheduled Trading Day
  that has a scheduled closing time for its regular trading session at
  4:00 p.m. (New York City time) or the then standard closing time for
  regular trading on the Exchange and is not a Disrupted Day.

  
	
   

  	
   

  
	
  Procedures
  for Exercise:

  	
   

  
	
   

  	
   

  
	
  Expiration Time:

  	
  11:59 p.m. (New
  York City time).

  

 

2

 

	
  Expiration Dates:

  	
  The 90 consecutive Full Exchange Business Days
  beginning on and including May 31, 2016 each shall be the Expiration
  Date for a number of Warrants equal to the Daily Number of Warrants on such
  date.  

  	 

	
   

  	
   

  	 

	
  Exercise Dates:

  	
  Each Expiration Date
  shall be an Exercise Date for a number of Warrants equal to the Daily Number
  of Warrants on such date.  The Warrants
  shall not be exercised prior to the first such Exercise Date.

  	 

	
   

  	
   

  	 

	
  Automatic Exercise:

  	
  Applicable; provided
  that Section 3.4(a) of the Equity Definitions shall apply to Cash Settlement
  and Net Physical Settlement; and provided  further that, unless
  all Warrants have been previously exercised hereunder, a number of Warrants
  for each Expiration Date equal to the Daily Number of Warrants for such
  Expiration Date shall be deemed to be automatically exercised.

  	 

	
   

  	
  Address:

  	
  AAR CORP.

  
	
  Counterparty’s
  Telephone

  	
   

  	
  1100 N. Wood Dale Road

  
	
  Number and Telex and/or

  	
   

  	
  Wood Dale, Illinois 60191

  
	
  Facsimile Number and
  Contact

  	
  Attention:

  	
  Richard J. Poulton, Chief Financial Officer

  
	
  Details for purpose of
  Giving

  	
  Facsimile
  No.:

  	
  (630) 227-2039

  
	
  Notice: 

  	
  Telephone No.:

  	
  (630) 227-2075

  
	
   

  	
   

  	
   

  
	
  Valuation:

  	
   

  
	
   

  	
   

  
	
  Valuation Dates:

  	
  Each Exercise Date

  
	
   

  	
   

  
	
  Settlement
  Terms:

  	
   

  
	
   

  	
   

  
	
  Cash Settlement:

  	
  Applicable; provided
  that it shall be a condition of Counterparty’s right to elect Cash Settlement
  that on the date of the Cash Settlement election, none of Counterparty, its
  directors, executive officers, or any person controlling, or exercising
  influence over, its decision to elect Cash Settlement is in possession of any
  material non-public information with respect to Counterparty or the Shares.
  If Counterparty elects to settle the Transaction by Cash Settlement,
  Counterparty represents and agrees that:

  
	
   

  	
   

  
	
   

  	
  (i) Counterparty
  is not, on the date of the Cash Settlement election, and will not be, on any
  day during the period from and including the first Expiration Date to and
  including the final Expiration Date, engaged in a distribution, as such term
  is used in Regulation M under the Securities Exchange Act of 1934, as amended
  (the “Exchange Act”);  and 

  
	
   

  	
   

  
	
   

  	
  (ii) during the period from and including the
  first Expiration Date to and including the final Expiration Date, without the
  prior written consent of Dealer, the Counterparty shall not, and shall cause
  its affiliates and affiliated purchasers (each as defined in Rule 10b-18
  under the Exchange Act) not to, directly or indirectly (including, without
  limitation, by means of a derivative instrument) purchase, offer to purchase,
  place any bid or limit order that would effect a purchase of, or commence any
  tender offer relating to, any Shares (or equivalent interest, including a
  unit of beneficial interest in a trust or limited partnership or a depository
  share) or any security convertible into or exchangeable for the Shares.

  
	
   

  	
   

  
	
  Settlement Currency:

  	
  USD

  
				

 

3

 

	
  Settlement Price:

  	
  For each Valuation
  Date, the Rule 10b-18 Dollar Volume Weighted Average Price of the Shares
  (“VWAP”) calculated from 9:45 a.m. to 3:45 p.m., as observed under
  the heading Bloomberg “VWAP” on Bloomberg page AIR.N <equity> VAP
  (or any successor thereto) (or if such volume-weighted average price is
  unavailable, the market value of one Share on such Valuation Date, as
  determined by the Calculation Agent); provided that, if the scheduled
  weekday closing time of the Exchange for any Valuation Date is later than
  4:00 p.m. (without regard to after hours or any other trading outside of
  the regular trading session hours) the VWAP shall be calculated for such
  Valuation Date from 9:45 a.m. until 15 minutes prior to such later
  closing time of the Exchange.

   

  Section 6.3(a) of
  the Equity Definitions is hereby amended by replacing clause (ii) in its
  entirety with “(ii) an Exchange Disruption, or” and inserting
  immediately following clause (iii) the phrase “; in each case that the
  Calculation Agent determines is material.”

  
	
   

  	
   

  
	
  Cash Settlement Payment
  Date:

  	
  With respect to each
  Valuation Date, three (3) Currency Business Days after the final
  Valuation Date.

  
	
   

  	
   

  
	
  Settlement Method
  Election:

  	
  Applicable with respect
  to Cash Settlement or Net Physical Settlement only.

  
	
   

  	
   

  
	
  Electing Party:

  	
  Counterparty

  
	
   

  	
   

  
	
  Settlement Method Election Date:

  	
  Ten (10) Business Days prior to the first
  Expiration Date

  
	
   

  	
   

  
	
  Default Settlement
  Method:

  	
  Net Physical Settlement.

  
	
   

  	
   

  
	
  Net Physical
  Settlement:

  	
  In the event that the
  Counterparty elects to settle this Transaction by Net Physical Settlement,
  Counterparty shall deliver to Dealer on the Settlement Date a number of
  Shares (the “Delivered Shares”)  equal to the Share Delivery Quantity; provided
  that in the event that the number of Shares calculated comprises any
  fractional Share, only whole Shares shall be delivered and an amount in cash
  equal to the value of such fractional share shall be payable by the
  Counterparty to Dealer in lieu of such fractional Share. If, in the
  reasonable opinion of Dealer based on advice of counsel, for any reason, the
  Shares deliverable upon Net Physical Settlement would not be immediately
  freely transferable by Dealer under Rule 144(b)(1) under the
  Securities Act of 1933, as amended (the “Securities Act”), then Dealer may
  elect to either (x) accept delivery of such Shares notwithstanding any
  restriction on transfer or (y) have the provisions set forth under
  “Registration/Private Placement” below apply, mutatis mutandis.

  
	
   

  	
   

  
	
  Share Delivery
  Quantity:

  	
  For each Exercise Date,
  a number of Shares, as calculated by the Calculation Agent, equal to the Net
  Physical Settlement Amount for such Exercise Date divided by the Settlement
  Price on the Valuation Date in respect of such Settlement Date plus an amount
  in cash in lieu of any fractional shares (based on the applicable Settlement
  Price).

  
	
   

  	
   

  
	
  Net Physical Settlement

  Amount:

  	
  For any Exercise Date,
  an amount equal to the product of (i) the Number of Warrants being
  exercised on the relevant Exercise Date, (ii) the Strike Price
  Differential for such Exercise Date and (iii) the Warrant Entitlement.

  
	
   

  	
   

  
	
  Strike Price
  Differential:

  	
  For any Valuation Date,
  (i) if the Settlement Price is greater than the Strike Price, an amount
  equal to the excess of such Settlement Price over the Strike Price for 

  

 

4

 

	
   

  	
  such Valuation Date or
  (ii) if such Settlement Price is less than or equal to the Strike Price,
  zero.

  
	
   

  	
   

  
	
  Settlement Date:

  	
  Settlement with respect
  to each Exercise Date shall occur on the third (3rd) Full Exchange Business
  Day following the final Valuation Date; provided that Dealer shall have the right to request
  by prior written notice to Counterparty a Settlement Date with respect to any
  Exercise Date and the related Share Delivery Quantity that is three
  (3) Full Exchange Business Days following such Exercise Date. Such
  request shall not unreasonably be denied.

  
	
   

  	
   

  
	
  Limitations on Net
  Physical Settlement by Counterparty:

  	
  Notwithstanding
  anything herein or in the Agreement to the contrary, the number of Shares
  that may be delivered at settlement by Counterparty shall not exceed
  4,216,740 Shares at any time (“Maximum
  Deliverable Share Amount”), as
  adjusted by Calculation Agent to account for any subdivision, stock-split,
  stock combination, reclassification or similar dilutive or anti-dilutive
  event with respect to the Shares.

   

  Counterparty represents
  and warrants that the number of Available Shares as of the Trade Date is
  greater than the Maximum Deliverable Share Amount. Counterparty covenants and
  agrees that (i) Counterparty shall not take any action of corporate
  governance or otherwise to reduce the number of Available Shares below the
  Maximum Deliverable Share and (ii) Counterparty shall use its reasonable
  efforts to cause the number of Available Shares at all times to be greater
  than the Maximum Deliverable Share Amount.

   

  For this purpose, “Available Shares”  means the number of Shares Counterparty
  currently has authorized (but not issued and outstanding) less the maximum
  number of Shares that may be required to be issued by Counterparty in
  connection with stock options, convertibles, and other commitments of
  Counterparty that may require the issuance or delivery of Shares in
  connection therewith.

  
	
   

  	
   

  
	
  Dividends:

  	
   

  
	
   

  	
   

  
	
  Dividends:

  	
  If at any time during
  the period from and including the Trade Date, to and including the date on
  which Counterparty has fully performed its obligations to deliver Shares
  hereunder, an ex-dividend date for a cash dividend occurs with respect to the
  Shares (an “Ex-Dividend Date”), and that dividend is different from the
  Regular Dividend on a per Share basis, then the Calculation Agent will, in
  its reasonable discretion, adjust the Strike Price, the Number of Warrants,
  the Daily Number of Warrants, the Warrant Entitlement and any other variable
  it deems appropriate to preserve the fair value of the Warrants after taking
  into account such dividend.

  
	
   

  	
   

  
	
  Regular Dividend:

  	
  Initially USD $0.00 per
  Share per quarter in respect of the Shares. In the event that, in any
  quarter, a regular quarterly Ex-Dividend Date occurs for which the amount of
  the corresponding cash dividend is different (the “New Dividend Amount”) from
  the Regular Dividend or no Ex-Dividend Date occurs (in which case the New
  Dividend Amount shall be zero), then following the adjustment by the
  Calculation Agent pursuant to “Dividends” above, the Regular Dividend shall
  equal the New Dividend Amount.

  
	
   

  	
   

  
	
  Extraordinary
  Dividends:

  	
  Any dividend other than
  Regular Dividends. For the avoidance of doubt, if more 

  

 

5

 

	
   

  	
  than one Ex-Dividend
  Date occurs in a quarter, the Calculation Agent shall designate any cash
  dividend other than a Regular Dividend as an Extraordinary Dividend and will,
  in its reasonable discretion, adjust the Strike Price, the Number of
  Warrants, the Daily Number of Warrants, the Warrant Entitlement and any other
  variable it deems appropriate to preserve the fair value of the Warrants after
  taking into account such Extraordinary Dividend.

  	 

	
   

  	
   

  	 

	
  Adjustments:

  	
   

  	 

	
   

  	
   

  	 

	
  Method of Adjustment:

  	
  Calculation Agent
  Adjustment

  	 

	
   

  	
   

  	 

	
  Extraordinary
  Events:

  	
   

  	 

	
   

  	
   

  	 

	
  Consequences of Merger
  Events:

  	
  (a) Share-for-Share:

  	
  Modified Calculation
  Agent Adjustment

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  (b) Share-for-Other:

  	
  Cancellation and
  Payment (Calculation Agent Determination)

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  (c) Share-for-Combined:

  	
  Component Adjustment
  (Calculation Agent Determination)

  	 

	
   

  	
   

  	
   

  	 

	
  Tender Offer:

  	
  Applicable

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Consequences of Tender
  Offers:

  	
  (a) Share-for-Share:

  	
  Modified Calculation
  Agent Adjustment 

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  (b)    Share-for-Other:

  	
  Cancellation and
  Payment (Calculation Agent Determination) 

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  (b) Share-for-Combined:

  	
  Component Adjustment
  (Calculation Agent Determination) 

  
	
   

  	
   

  	 

	
   

  	
  With respect to any
  Extraordinary Events hereunder, upon the occurrence of Cancellation and
  Payment in whole or in part, the parties agree that the amount to be paid, in
  accordance with the Equity Definitions, shall constitute a Transaction Early
  Termination Amount, subject to satisfaction by the payment or delivery of
  Shares or cash as set forth in the Early Termination section below.

  	 

	
   

  	
   

  	 

	
  Nationalization,
  Insolvency or Delisting:

  	
  Cancellation and
  Payment (Calculation Agent Determination) (subject to satisfaction by payment
  or delivery of Shares or cash as set forth in “Early Termination”
  below). In addition to the provisions of Section 12.6(a)(iii) of
  the Equity Definitions, it will also constitute a Delisting if the Exchange
  is located in the United States and the Shares are not immediately re-listed,
  re-traded or re-quoted on any of the New York Stock Exchange, the American
  Stock Exchange, the NASDAQ Global Market or the NASDAQ Global Select Market
  (or their respective successors); if the Shares are immediately re-listed,
  re-traded or re-quoted on any such exchange or quotation system, such
  exchange or quotation system shall thereafter be deemed to be the Exchange.

  	 

	
   

  	
   

  	 

	
  Determining Party:

  	
  Dealer

  	 

	
   

  	
   

  	 

	
  Additional
  Disruption Events:

  	
   

  	 

	
   

  	
   

  	 

	
  Change in Law:

  	
  Applicable

  	 

					

 

6

 

	
  Failure to Deliver:

  	
  Not Applicable

  
	
   

  	
   

  
	
  Insolvency Filing:

  	
  Applicable

  
	
   

  	
   

  
	
  Hedging Disruption
  Event:

  	
  Applicable

  
	
   

  	
   

  
	
  Increased Cost of
  Hedging:

  	
  Not Applicable

  
	
   

  	
   

  
	
  Loss of Stock Borrow:

  	
  Applicable.
  Section 12.9(b)(iv) of the Equity Definitions is hereby amended by
  deleting the text from and including “(A)” to and including “(B)” and by
  deleting the words “in each case”.

  
	
   

  	
   

  
	
  Maximum Stock Loan
  Rate:

  	
  0.60%

  
	
   

  	
   

  
	
  Increased Cost of Stock
  Borrow:

  	
  Applicable; provided
  that it shall be a condition to Counterparty’s right to make the election
  described in clause (C) of Section 12.9(b)(v) of the Equity
  Definitions that on the date of such election, none of Counterparty, its
  directors, executive officers, or any person controlling, or exercising influence
  over, its decision to make such election is in possession of any material
  non-public information with respect to Counterparty or the Shares; and provided
  further that, if Counterparty timely makes the election described in
  clause (A) or (B) of Section 12.9(b)(v) of the Equity
  Definitions, Counterparty shall thereafter remain entitled, subject to the
  foregoing condition, to terminate the Transaction pursuant to
  Section 12.9(b)(v)(C) of the Equity Definitions upon ten Scheduled
  Trading Days’ notice to Dealer.
  Section 12.9(b)(v) of the Equity Definitions is hereby amended by
  deleting the text from and including “(X)” to and including “(Y)”.

  
	
   

  	
   

  
	
  Initial Stock Loan
  Rate:

  	
  0.25%

  
	
   

  	
   

  
	
  Hedging Party:

  	
  Dealer

  
	
   

  	
   

  
	
  Determining Party:

  	
  Dealer

  
	
   

  	
   

  
	
  Non-Reliance:

  	
  Applicable

  
	
   

  	
   

  
	
  Agreements and
  Acknowledgments Regarding Hedging Activities:

  	
  Applicable

  
	
   

  	
   

  
	
  Additional
  Acknowledgments:

  	
  Applicable

  
	
   

  	
   

  
	
  Other
  Provisions:

  	
   

  
	
   

  	
   

  
	
  Additional Agreements:

  	
  If Counterparty would
  be obligated to pay cash to Dealer pursuant to the terms of this Agreement
  due to an event or circumstance outside Counterparty’s control without having
  had the right (other than pursuant to this paragraph) to elect to deliver
  Shares in satisfaction of such payment obligation, then Counterparty may
  elect to deliver to Dealer a number of Shares (whether registered or
  unregistered) having a cash value equal to the amount of such payment
  obligation. Such number of Shares to be delivered shall be the number of
  Shares, determined by the Calculation Agent, sufficient for Dealer to realize the cash equivalent
  of such payment obligation from proceeds of the sale of such number of Shares
  over a reasonable period of time taking into account any applicable discount 

  

 

7

 

	
   

  	
  (determined in a commercially
  reasonable manner) to reflect any restrictions on transfer as well as the
  market value of the Shares. Settlement relating to any delivery of Shares
  pursuant to this paragraph shall occur within a reasonable period of time.
  The number of Shares delivered pursuant to this paragraph shall not exceed
  the Maximum Deliverable Share Amount and shall be subject to the provisions
  under “Early Termination” hereof regarding Proceeds Amount and the provisions
  set forth in subsection (c) under “Additional Agreements,
  Representations and Covenants of Counterparty, Etc.” below.

  
	
   

  	
   

  
	
  Early Termination:

  	
  Notwithstanding any
  provision to the contrary, upon the designation of an Early Termination Date
  or the occurrence of Cancellation and Payment in whole or in part hereunder
  (except in the case of an Event of Default in which Counterparty is the
  Defaulting Party or a Termination Event in which Counterparty is the Affected
  Party, other than an (x) Event of Default of the type described in
  Section 5(a)(iii), (v), (vi) or (vii) of the Master Agreement
  or (y) a Termination Event of the type described in
  Section 5(b)(i), (ii), (iii), (iv), or (v) of the Master Agreement
  that in the case of either (x) or (y) resulted from an event or
  events outside Counterparty’s control), Counterparty’s payment obligation in
  respect of this Transaction (the “Transaction
  Early Termination Amount”) may, at the option of Counterparty,
  be satisfied by the delivery of a number of Shares equal to the Transaction
  Early Termination Amount divided by the Termination Price (“Early Termination Stock Settlement”);
  provided, however, that Counterparty must notify Dealer of its election of Early
  Termination Stock Settlement by the close of business on the day that is two
  Exchange Business Days following the day that the notice designating the
  Early Termination Date, or notice that an Extraordinary Event has resulted in
  the cancellation or termination of the Transaction in whole or in part, is
  effective. “Termination Price”
  means the market value per Share on the date that Shares are delivered in connection with such Early
  Termination Date, as determined by the Calculation Agent in a commercially
  reasonable manner taking into account any applicable discount to reflect any
  restrictions on transfer.  

  	 

	
   

  	
   

  	 

	
   

  	
  A number of Shares
  calculated as being due in respect of any Early Termination Stock Settlement
  will be deliverable on the third Clearance System Business Day following the
  date that notice specifying the number of Shares deliverable is effective; provided
  that, if Counterparty is delivering Shares as a result of a Merger Event,
  the Settlement Date for such delivery will be immediately prior to the
  effective time of the Merger Event and the Shares will be deemed delivered at
  such time such that Dealer
  will be a holder of the Shares prior to such effective time and be entitled to receive such merger consideration
  as a holder of Shares at such time would be entitled to receive (and
  references herein to Shares shall be deemed to refer to such merger
  consideration, as applicable). Section 6(d)(i) of the
  Agreement is hereby amended by adding the following words after the word
  “paid” in the fifth line thereof: “or any delivery is to be made, as
  applicable.”

  	 

	
   

  	
   

  	 

	
   

  	
  On or prior to the
  Early Termination Date or date on which notice that an Extraordinary Event
  has resulted in the cancellation or termination of the Transaction in whole
  or in part is effective, as applicable, if Early Termination Stock Settlement
  is elected and if so requested by Dealer upon advice of counsel, Counterparty
  shall comply with the provisions set forth below opposite the caption
  “Registration/Private Placement”.

  	 

	
   

  	
   

  	 

	
  Registration/Private
  Placement:

  	
  If the provisions under
  this heading “Registration/Private Placement” apply, Counterparty shall
  (subject to its right to make the election described in the immediately
  succeeding paragraph) (A) afford
  Dealer a reasonable opportunity 

  	 

 

8

 

	
   

  	
  to conduct a due diligence investigation with respect to Counterparty that
  is customary in scope for underwritten offerings of equity securities that
  yields a result reasonably satisfactory to Dealer; (B) enter into
  a registration rights agreement with Dealer (a “Registered Settlement”)
  in form and substance reasonably acceptable to Dealer which agreement (“Registration Rights
  Agreement”) will contain among other things, customary
  representations and warranties and indemnification, restrictions on sales
  during “blackout dates” as provided for in the Registration Rights Agreement
  and shall satisfy the conditions contained therein; and (C) promptly file and procure the effectiveness a Registration Statement pursuant to
  Rule 415 under the Securities Act. If and when such Registration
  Statement shall have been declared effective by the Securities and Exchange
  Commission, Counterparty shall have made available to Dealer such Prospectuses as Dealer may reasonably request to comply with the applicable
  prospectus delivery requirements for the resale by Dealer of such number of Shares as Dealer shall specify (or, if greater, the number of Shares that
  Counterparty shall specify). Such Registration Statement shall be effective
  and Prospectus shall be current until the earliest of the date on which
  (i) all the Delivered Shares or Shares
  delivered by Counterparty in connection with an Early Termination Date, as the case may be, have been sold,
  (ii) Dealer has advised
  Counterparty that it no longer requires that such Registration Statement be
  effective or (iii) all remaining Shares could be sold by Dealer without registration pursuant
  to Rule 144 promulgated under the Securities Act (the “Termination Registration Period”). It is understood that the Registration
  Statement and Prospectus will cover a number of Shares equal to the aggregate
  number of Shares (if any) reasonably estimated by Dealer to be potentially deliverable by Counterparty in connection
  with Net Physical Settlement or
  Early Termination Stock Settlement hereunder, as the case may be, but in no event exceeding the Maximum
  Deliverable Share Amount. On each day during the Termination Registration
  Period Counterparty shall represent that each of its filings under the
  Securities Act, the Exchange Act or other applicable securities laws that are
  required to be filed have been filed and that, as of the respective dates
  thereof and as of the date of this representation, they do not contain any
  untrue statement of a material fact or omission of a material fact required
  to be stated therein or necessary to make the statements made, in the light of
  the circumstances under which they were made, not misleading. 

  
	
   

  	
   

  
	
   

  	
  In lieu of a Registered
  Settlement, Counterparty may elect, by notice to Dealer no later than the time the relevant delivery
  obligation is due , that this paragraph shall apply: 

  
	
   

  	
   

  
	
   

  	
   

  	
  (a)     Counterparty
  shall afford Dealer
  and any potential institutional purchaser of any Shares identified by Dealer a reasonable opportunity to
  conduct a due diligence investigation with respect to Counterparty that is
  customary in scope for private placements of equity securities subject to
  execution of any customary confidentiality agreements;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)     Counterparty
  shall enter into an agreement (a “Private
  Placement Agreement”) with Dealer on commercially reasonable
  terms in connection with the private placement of such Shares (including any additional Shares pursuant to
  clause (c) below) by Counterparty to Dealer or an affiliate and the private resale of such shares by Dealer or such affiliate,
  substantially similar to private placement purchase agreements customary for
  private placements of equity securities, in form and substance commercially
  reasonably satisfactory to Dealer,
  which Private Placement Agreement shall include provisions relating to

  

 

9

 

	
   

  	
   

  	
  the indemnification of,
  and contribution in connection with the liability of, Dealer and its affiliates, shall
  provide for the payment by Counterparty of all expenses in connection with
  such resale, including all reasonable and documented fees and expenses of
  counsel for Dealer, shall
  contain representations, warranties and agreements of Counterparty reasonably
  necessary or advisable to establish and maintain the availability of an
  exemption from the registration requirements of the Securities Act for such
  resales, and shall use commercially reasonable efforts to provide for the
  delivery of accountants’ “comfort letters” to Dealer or such affiliate with respect to the financial statements
  and certain financial information contained in or incorporated by reference
  into the offering memorandum prepared for the resale of such Shares; 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)     Dealer shall sell the Delivered Shares or the Shares delivered by Counterparty in connection with Early
  Termination Stock Settlement, as the case may be, in a commercially
  reasonable manner until the amount received by Dealer for the sale of the Shares (the “Proceeds Amount”) is equal to the Net Physical Settlement Amount or the Transaction
  Early Termination Amount, as applicable.
  Any remaining delivered Shares shall
  be returned to Counterparty. If the Proceeds Amount is less than the Net Physical Settlement Amount or the Transaction
  Early Termination Amount, as
  applicable, Counterparty shall promptly deliver upon notice from Dealer additional Shares to Dealer until the dollar amount from
  the sale of such Shares by Dealer
  equals the difference between the Net
  Physical Settlement Amount or the Transaction Early Termination Amount, as applicable, and the Proceeds
  Amount. In no event shall Counterparty be required to deliver to Dealer a number of Shares greater than
  the Maximum Deliverable Share Amount.

  
	
   

  	
   

  	
   

  
	
   

  	
  Notwithstanding the
  foregoing: (I) if Counterparty has elected to deliver Shares as described in paragraph (a) above and
  either (A) Counterparty does not provide for the sale of the Shares
  under the Registration Statement as provided in the Registration Rights
  Agreement, (B) some Shares
  cannot be registered under the Registration Statement due to
  Rule 415(a)(4) under the Securities Act or (C) some Shares cannot be sold due to the application of a
  blackout period or the failure of the Registration Statement to become
  effective on or prior to the date on which the relevant delivery obligation
  is due, then the provisions of the preceding paragraph shall apply to
  the extent Counterparty has not satisfied its obligations hereunder.
  (II) If the preceding paragraph is applicable and Counterparty fails to
  satisfy its obligations under such paragraph, then Counterparty may deliver
  unregistered Shares of equivalent value to the Net Physical Settlement Amount or the Transaction Early
  Termination Amount, as applicable,
  (or, if applicable, the unsatisfied portion thereof). The value of any
  unregistered Shares so delivered shall be discounted to reflect an
  appropriate liquidity discount (determined by Dealer in a commercially reasonable manner, taking into account Dealer’s policies and determinations
  with respect to any transfer restrictions that Dealer deems it advisable to observe in connection with sales of
  such Shares). (III) If some or all of the Delivered Shares or Shares delivered in connection with an
  Early Termination Stock Settlement, as applicable, cannot be used to
  close out stock loans in the shares of Counterparty entered into to establish
  or maintain short positions by Dealer
  in connection with this Transaction without a prospectus being required by
  applicable law to be delivered to such lender, then the value of any such
  Shares shall reflect the cost (determined by Dealer in good faith and in a commercially reasonable manner) to Dealer of trading Shares in order to
  close out its hedge position if any, and
  the 

  

 

10

 

	
   

  	
  number of Shares required to be delivered shall be adjusted accordingly. In
  no event shall Counterparty be required to (i) top-up the delivery in
  cash or (ii) deliver to Dealer
  a number of Shares greater than the Maximum Deliverable Share Amount.

  
	
   

  	
   

  
	
  Compliance With
  Securities Laws:

  	
  Counterparty represents
  and agrees that it has complied, and will comply, in connection with this
  Transaction and all related or contemporaneous sales and purchases of Shares,
  with the applicable provisions of the Securities Act, the Exchange Act and
  the rules and regulations promulgated thereunder, including, without
  limitation, Rule 10b-5 and 13e and Regulation M under the Exchange Act. 

  
	
   

  	
   

  
	
   

  	
  Each party acknowledges
  that the offer and sale of the Transaction to it is intended to be exempt
  from registration under the Securities Act by virtue of
  Section 4(2) thereof. Accordingly, each party represents and
  warrants to the other party that (i) it has the financial ability to
  bear the economic risk of its investment in the Transaction and is able to
  bear a total loss of its investment, (ii) it is an “accredited investor”
  as that term is defined in Regulation D as promulgated under the Securities
  Act and (iii) the disposition of the Transaction is restricted under
  this Confirmation, the Securities Act and state securities laws.   

  
	
   

  	
   

  
	
   

  	
  Counterparty further
  represents and warrants that:

  
	
   

  	
   

  
	
   

  	
  (a)      Counterparty
  is not entering into this Transaction to create actual or apparent trading
  activity in the Shares (or any security convertible into or exchangeable for
  Shares) or to raise or depress or otherwise manipulate the price of the
  Shares (or any security convertible into or exchangeable for Shares);

  
	
   

  	
   

  
	
   

  	
  (b)      Counterparty
  represents and acknowledges that as of the date hereof and without limiting
  the generality of Section 13.1 of the Equity Definitions, Dealer is not making any representations
  or warranties with respect to the treatment of the Transaction under FASB
  Statements 149 or 150, EITF Issue No. 00-19 (or any successor issue
  statements) or under FASB’s Liabilities & Equity Project;

  
	
   

  	
   

  
	
   

  	
  (c)      Counterparty
  is not, and after giving effect to the Transaction contemplated hereby, will
  not be, an “investment company” as such term is defined in the Investment
  Company Act of 1940, as amended; 

  
	
   

  	
   

  
	
   

  	
  (d)     As
  of the Trade Date and each date on which a payment of cash is made by Counterparty
  hereunder, (i) the assets of Counterparty at their fair valuation exceed
  the liabilities of Counterparty, including contingent liabilities;
  (ii) the capital of Counterparty is adequate to conduct its business;
  and (iii) Counterparty has the ability to pay its debts and other
  obligations as such obligations mature and does not intend to, or believe
  that it will, incur debt or other obligations beyond its ability to pay as
  such obligations mature.

  
	
   

  	
   

  
	
  Account Details:

  	
  Account for payments to
  Counterparty:

  
	
   

  	
   

  	
  To be
  advised.

  
	
   

  	
   

  
	
   

  	
  Account for payments to
  Dealer:

  
	
   

  	
   

  	
  Merrill Lynch Financial
  Markets

  
	
   

  	
   

  	
  Chase Manhattan Bank 

  
	
   

  	
   

  	
  ABA# 021000021 

  
	
   

  	
   

  	
  Acct# 066642892 

  
				

 

11

 

	
   

  	
   

  	
  Account for delivery of
  Shares to Dealer:

  To be advised.

  
	
   

  	
   

  
	
  Agreement Regarding
  Shares:

  	
  Counterparty agrees
  that, in respect of any Shares delivered to Dealer, such Shares shall be, upon
  such delivery, duly and validly authorized, issued and outstanding, fully
  paid and non-assessable and subject to no adverse claims of any other party.
  The issuance of such Shares does not and will not require the consent,
  approval, authorization, registration or qualification of any government
  authority, except such as shall have been obtained on or before the delivery
  date of any Shares or as may be required in connection with any Registration
  Statement filed with respect to any Shares.

  	 

	
   

  	
   

  	 

	
  Bankruptcy Rights:

  	
  In the event of
  Counterparty’s bankruptcy, Dealer’s rights in connection with this Transaction shall not exceed
  those rights held by common shareholders. For the avoidance of doubt, the
  parties acknowledge and agree that Dealer’s
  rights with respect to any other claim arising from this Transaction prior to
  Counterparty’s bankruptcy shall remain in full force and effect and shall not
  be otherwise abridged or modified in connection herewith.

  	 

	
   

  	
   

  	 

	
  Set-Off:

  	
  Each party waives any
  and all rights it may have to set-off, whether arising under any agreement,
  applicable law or otherwise.

  	 

	
   

  	
   

  	 

	
  Transfer:

  	
  Neither party may transfer
  its rights or delegate its obligations under this Transaction without the
  prior written consent of the other party, except that Dealer, after payment in full of the
  Premium, may assign its rights and delegate its obligations hereunder, in
  whole or in part, to any other person (an “Assignee”) without the prior consent of the
  Counterparty, so long as Assignee makes to Counterparty the representations
  set forth in the second paragraph under “Compliance with Securities Laws,”
  effective (the “Transfer Effective Date”)
  upon delivery to Counterparty of an executed acceptance and assumption by the
  Assignee (an “Assumption”)
  of the transferred obligations of Dealer
  under this Transaction (the “Transferred
  Obligations”). Notwithstanding any other provision in this
  Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other
  securities to or from Counterparty, Dealer
  may designate any of its affiliates to purchase, sell, receive or deliver
  such Shares or other securities and otherwise to perform Dealer’s obligations in respect of
  this Transaction and any such designee may assume such obligations. Dealer shall be discharged of its
  obligations to Counterparty to the extent of any such performance.

  	 

	
   

  	
   

  	 

	
  Indemnity:

  	
  Counterparty agrees to
  indemnify Dealer,
  its Affiliates and their respective directors, officers, agents and
  controlling parties (each such person being an “Indemnified
  Party”) from and against any and all losses, claims, damages
  and liabilities, joint and several, to which such Indemnified Party may
  become subject because of a breach of any representation or covenant
  hereunder, in the Agreement or any other agreement relating to the Agreement
  or Transaction and will reimburse Indemnified Party for all reasonable
  expenses (including reasonable legal fees and expenses) as they are incurred
  in connection with the investigation of, preparation for, or defense of, any
  pending or threatened claim or any action or proceeding arising therefrom,
  whether or not such Indemnified Party is a party thereto. Seller will not be
  liable under the foregoing Indemnity provision to the extent that any loss,
  claim, damage, liability or expense is found in a final judgment by a court
  to have resulted from Dealer’s
  gross negligence or willful misconduct.

  	 

				

 

12

 

Additional
Agreements, Representations and Covenants of Counterparty, Etc.:

 

(a)                                  Counterparty
hereby represents and warrants to Dealer,
on each day from the Trade Date to and including the earlier of (i) March 5,
2008 and (ii) the date by which Dealer
is able to initially complete a hedge of its position created by this
Transaction, that:

 

(1)                                 it
will not, and will not permit any person or entity subject to its control to,
bid for or purchase Shares during such period except pursuant to transactions
or arrangements which have been approved by Dealer or an affiliate of Dealer;
and

 

(2)                                 it
has publicly disclosed all material information necessary for it to be able to
purchase or sell Shares in compliance with applicable federal securities laws.

 

(b)                                 No
collateral shall be required by either party for any reason in connection with
this Transaction.

 

(c)                                  Notwithstanding
anything to the contrary herein, Dealer
shall not be entitled to exercise any Warrant or receive any Shares deliverable
hereunder, and Automatic Exercise shall not apply with respect to any Warrant
to the extent (but only to the extent) that after such receipt of any Shares
upon the exercise of such Warrant or otherwise hereunder Dealer, or its ultimate parent entity
would, directly or indirectly, be the beneficial owner (as such term is defined
for purposes of Section 13(d) of the Exchange Act) at any time of more
than 8.0 percent of the class of the Counterparty’s outstanding equity
securities that is comprised of the Shares (an “Excess Share Owner”).

 

Dealer
shall provide prior notice to Counterparty if the exercise of any Warrant or
delivery of Shares hereunder would cause Dealer to become directly or indirectly, an Excess Share Owner; provided
that the failure of Dealer to
provide such notice shall not alter the effectiveness of the provisions set
forth in the preceding sentence and any purported exercise or delivery in
violation of such provisions shall be void and have no effect. If any delivery
owed to Dealer hereunder is not
made, in whole or in part, as a result of this provision, Counterparty’s
obligation to make such delivery shall not be extinguished and Counterparty
shall make such delivery as promptly as practicable after Dealer gives notice that such delivery
would not result in Dealer being
an Excess Share Owner.

 

If Dealer is not entitled to exercise any
Warrant because such exercise would cause Dealer to become, directly or indirectly, an Excess Share Owner and Dealer thereafter disposes of Shares
owned by it or any action is taken that would then permit Dealer to exercise such Warrant without
such exercise causing it to become, directly or indirectly, an Excess Share
Owner, then Dealer shall provide
notice of the taking of such action to Counterparty and such Warrant shall then
become exercisable by Dealer to
the extent such Warrant is otherwise or had otherwise become exercisable
hereunder. In such event, the Expiration Date with respect to such Warrant shall
be the date on which Counterparty receives such notice from Dealer, and the related Settlement Date
shall be as soon as reasonably practicable after receipt of such notice but no
more than three (3) Exchange Business Days thereafter (but in no event
shall the Settlement Date occur prior to the date on which it would have
otherwise occurred but for the provisions of this subsection); provided
that the related Net Physical Settlement Amount shall be the same as the Net
Physical Settlement Amount but for the provisions of this subsection. In
addition, within 30 calendar days of any Settlement Date, Counterparty shall
use its reasonable efforts to refrain from activities that could reasonably be
expected to result in Dealer’s
ownership of Shares exceeding 10% of all issued and outstanding Shares.

 

Matters
Relating to Agent:

 

1.                                       Agent
will be responsible for the operational aspects of the Transactions effected
through it, such as record keeping, reporting, and confirming Transactions to
Counterparty and Dealer;

 

2.                                       Unless
Counterparty is a “major U.S. institutional investor,” as defined in Rule 15a-6
of the Exchange Act, neither Counterparty nor Dealer will contact the other without the direct involvement of
Agent;

 

13

 

3.                                       Agent’s
sole role under this Agreement and with respect to any Transaction is as an
agent of Counterparty and Dealer
on a disclosed basis and Agent shall have no responsibility or liability to
Counterparty or Dealer hereunder
except for gross negligence or willful misconduct in the performance of its
duties as agent. Agent is authorized to act as agent for Dealer, but only to the extent expressly
required to satisfy the requirements of Rule 15a-6 under the Exchange Act
in respect of the Options described hereunder. Agent shall have no authority to
act as agent for Counterparty generally or with respect to transactions or
other matters governed by this Agreement, except to the extent expressly
required to satisfy the requirements of Rule 15a-6 or in accordance with
express instructions from Counterparty.

 

Certain Important Information:

 

Dealer is an OTC
Derivatives Dealer registered with the U.S. Securities and Exchange Commission
(SEC). Applicable SEC rules require us to provide you with the following
information regarding SEC regulation of OTC Derivatives Dealers: Dealer is
exempt from the provisions of the Securities Investor Protection Act of 1970
(SIPA), including membership in the Securities Investor Protection Corporation
(SIPC). Therefore, your account is not covered by SIPA protection. Except as
otherwise agreed in writing by you and us, Dealer may repledge and otherwise
use in its business collateral you have pledged to Dealer under the Agreement.
Collateral you have pledged to Dealer will not be subject to the requirements
of Securities Exchange Act Rules: 8c-1 and 15c2-1 regarding hypothecation of
collateral; 15c3-2 regarding free credit balances; or 15c3-3 regarding custody
of securities and calculations of a reserve formula applicable to a fully
regulated SEC registered broker or dealer. In the event of Dealer’s failure (by
insolvency or otherwise), you would likely be considered to be an unsecured
creditor of Dealer as to any collateral pledged to Dealer under the Agreement.

 

Dealer is incorporated in
Delaware and is a direct, wholly owned subsidiary of Merrill Lynch &
Co., Inc. Dealer has entered into this transaction as principal through
Agent as its agent. The time of this Transaction shall be notified to the
Counterparty upon request.

 

ISDA
Master Agreement:

 

With respect to the
Agreement, Dealer
and Counterparty each agree as follows:

 

“Specified Entity”  means in relation to Seller and in relation to Counterparty
for purposes of this Transaction: Not applicable.

 

“Specified
Transaction” has the meaning assigned to such term in Section 14
of this Agreement.

 

The “Cross Default”  provisions of Section 5(a)(vi) of the
Agreement will apply to Dealer and will apply to Counterparty.

 

“Threshold Amount” means
with respect to Dealer, 3% of the consolidated shareholders equity of Merrill
Lynch & Co., Inc.

 

“Threshold Amount” means
with respect to Counterparty, $10,000,000.

 

The “Credit Event Upon Merger”  provisions of Section 5(b)(v) of
the Agreement will not apply to Dealer or to Counterparty.

 

Additional Termination Event.

 

The occurrence of any of the following shall
constitute an Additional Termination Event with respect to which the
Transaction shall be the sole Affected Transaction and Counterparty shall be
the sole Affected Party; provided
that with respect to any Additional Termination Event, Dealer may choose to treat part of the Transaction
as the sole Affected Transaction, and, upon the termination of the Affected
Transaction, a Transaction with terms identical to those set forth herein except
with a Number of Warrants equal to the unaffected number of Warrants shall be
treated for all purposes as the Transaction, which shall remain in full force
and effect:

 

14

 

(i) within the
period commencing on the Trade Date and ending on the second anniversary of the
Premium Payment Date, Buyer reasonably determines that it is advisable to
terminate a portion of the Transaction so that Buyer’s related hedging
activities will comply with applicable securities laws, rules or
regulations;

 

(ii) any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a person shall be deemed to have
beneficial ownership of all shares that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of voting stock representing 50% or more of the
total voting power of all outstanding voting stock of the company;

 

(iii) Counterparty
consolidates with, or merges with or into, another person or Counterparty
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, other than any such transaction (a) entered
into solely for the purpose of changing the Counterparty’s jurisdiction of
incorporation and resulting in a reclassification, conversion or exchange of
outstanding shares of common stock solely into shares of common stock of the
surviving entity, (b) where immediately after such transaction the person
or persons that “beneficially owned” (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) immediately prior to such transaction, directly or
indirectly, voting stock representing a majority of the total voting power of
all outstanding voting stock of Counterparty, “beneficially own or owns” (as so
determined), directly or indirectly, voting stock representing a majority of
the total voting power of the outstanding voting stock of the surviving or
transferee person or (c) that does not result in a reclassification,
conversion, exchange or cancellation of outstanding hares of common stock;

 

(iv) the
adoption of a plan of liquidation or dissolution of Counterparty; or

 

(v) the Shares (or
other common stock into which the Shares have been converted or for which the
Shares have been exchanged in connection with any merger, reclassification or
recapitalization of Counterparty) are not listed for trading on the New York
Stock Exchange  or the NASDAQ Global
Market or the NASDAQ Global Select Market (or their respective successors) or
cease to be so traded or quoted in contemplation of a delisting or withdrawal
of approval.

 

Notwithstanding the foregoing, a transaction
described in clause (ii) or (iii) above will not constitute an
Additional Termination Event if all the consideration for the Shares (excluding
cash payments for fractional shares and cash payments made in respect of
dissenters’ appraisal rights) in the transaction or transactions consists of
common stock and any associated rights listed on a United States national
securities exchange, or which will be so traded or quoted when issued or
exchanged in connection with such transaction, and as a result of such
transaction or transactions the Warrants hereunder become convertible solely
into such common stock.

 

The “Automatic Early Termination”  provision of Section 6(a) of
the Agreement will not apply to Dealer or to Counterparty.

 

“Termination Currency” means USD.

 

Tax
Representations.

 

(I)                                   Payer Representations. For the purpose of Section 3(e) of
the Agreement, each party represents to the other party that it is not required
by any applicable law, as modified by the practice of any relevant governmental
revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest
under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by
it to the other party under the Agreement. In making this representation, each
party may rely on (i) the accuracy of any representations made by the
other party pursuant to Section 3(f) of the Agreement, (ii) the
satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of
the Agreement, and the accuracy and effectiveness of any document provided by
the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the
Agreement, and (iii) the satisfaction of the agreement of the other party

 

15

 

contained in Section 4(d) of the Agreement; provided
that it will not be a breach of this representation where reliance is
placed on clause (ii) above and the other party does not deliver a form or
document under Section 4(a)(iii) of the Agreement by reason of
material prejudice to its legal or commercial position.

 

(II)                               Payee Representations. For the purpose of Section 3(f) of
the Agreement, each party makes the following representations to the other
party:

 

(i)                                     Dealer represents that it is a company
incorporated in Delaware.

 

(ii)                                  Counterparty
represents that it is a corporation incorporated in Delaware.

 

Delivery
Requirements. For the purpose of Sections 4(a)(i) and (ii)
of the Agreement, each party agrees to deliver the following documents:

 

(a)                                  Tax
forms, documents or certificates to be delivered are:

 

Dealer
agrees to complete (accurately and in a manner reasonably satisfactory to
Counterparty), execute, and deliver to Counterparty, United States Internal
Revenue Service Form W-9 and all required attachments, or any successor of
such form(s): (i) before the first payment date under this agreement; (ii) promptly
upon reasonable demand by Counterparty; and (iii) promptly upon learning
that any such Form previously provided by Dealer has become obsolete or incorrect.

 

Counterparty agrees to
complete (accurately and in a manner reasonably satisfactory to Dealer), execute, and deliver to Dealer, United States Internal Revenue
Service Form W-9, or any successor of such form(s): (i) before the
first payment date under this agreement; (ii) promptly upon reasonable
demand by Dealer; and (iii) promptly
upon learning that any such form(s) previously provided by Counterparty
has become obsolete or incorrect.

 

(b)                                 Other
documents to be delivered:

 

	
  Party Required to

  Deliver Document

  	
   

  	
  Document Required to be Delivered

  	
   

  	
  When Required

  	
   

  	
  Covered by

   Section 3(d)

  Representation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Counterparty and
  Dealer

  	
   

  	
  Evidence of the authority and true signatures of
  each official or representative signing this Confirmation

  	
   

  	
  Upon or before execution and delivery of this
  Confirmation

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Counterparty

  	
   

  	
  Certified copy of the resolution of the Board of
  Directors or equivalent document authorizing the execution and delivery of
  this Confirmation and such other certificate or certificates as Dealer shall reasonably request

  	
   

  	
  Upon or before execution and delivery of this
  Confirmation

  	
   

  	
  Yes

  	
   

  

 

Effectiveness.  If, prior to the Effective Date, Dealer reasonably determines
that it is advisable to cancel the Transaction because of concerns that Dealer’s related hedging activities could be viewed as not complying with
applicable securities laws, rules or regulations, such Transaction shall
be cancelled and shall not become effective, and neither party shall have any obligation
in respect of such Transaction.

 

16

 

Addresses
for Notices: For the purpose of Section 12(a) of
the Agreement:

 

	
  Address
  for notices or communications to Dealer for all
  purposes:

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Merrill Lynch Financial
  Markets, Inc.

  
	
   

  	
   

  	
  4 World Financial
  Center, 17th Floor

  
	
   

  	
   

  	
  New York, New York
  10080

  
	
   

  	
   

  	
  Merrill Lynch Financial
  Centre

  
	
  Attention:

  	
   

  	
  Manager of Equity
  Documentation

  
	
  Facsimile No.:

  	
   

  	
  (917) 778-0835

  
	
  Telephone No.:

  	
   

  	
  (212) 449-1951

  
				

 

Address for
notices or communications to Counterparty for all purposes:

 

	
  Address:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
  1100 N. Wood Dale Road

  
	
   

  	
   

  	
  Wood Dale, Illinois 60191

  
	
  Attention:

  	
   

  	
  Richard J. Poulton, Chief Financial Officer

  
	
  Facsimile
  No.:

  	
   

  	
  (630) 227-2039

  
	
  Telephone
  No.:

  	
   

  	
  (630) 227-2075

  

 

In addition, in the case
of notices or communications relating to Section 5, 6, 11 or 13 of this
Agreement, a second copy of any such notice or communication shall be addressed
to the attention of Counterparty’ General Counsel as follows:

 

	
  Address:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
  1100 N. Wood Dale Road

  
	
   

  	
   

  	
  Wood Dale, Illinois 60191

  
	
  Attention:

  	
   

  	
  General Counsel’s
  Office

  
	
  Facsimile
  No.:

  	
   

  	
  (630) 227-2058

  
	
  Telephone
  No.:

  	
   

  	
  (630) 227-2000

  

 

Multibranch
Party. For the purpose of Section 10(c) of
the Agreement: Neither Dealer nor
Counterparty is a Multibranch Party.

 

Calculation
Agent.  “Calculation
Agent” means Dealer, acting in
good faith and in a commercially reasonable manner.

 

Credit
Support Document.

 

Dealer:
Not Applicable.

 

Counterparty: Not
Applicable

 

Credit
Support Provider.

 

With respect to Dealer: Not Applicable.

 

With respect to
Counterparty: Not Applicable.

 

Governing
Law. This Confirmation will be governed by, and construed in
accordance with, the laws of the State of New York.

 

Submission to Jurisdiction.  Each party hereby irrevocably and
unconditionally submits for itself and its property in any legal action or
proceeding by the other party against it relating to the Transaction to which
it is a party, or for

 

17

 

recognition and
enforcement of any judgment in respect thereof, to the exclusive jurisdiction
of the Supreme Court of the State of New York, sitting in New York County, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof.

 

Waiver
of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in
respect of any suit, action or proceeding relating to this Transaction. Each
party (i) certifies that no representative, agent or attorney of the other
party has represented, expressly or otherwise, that such other party would not,
in the event of such a suit, action or proceeding, seek to enforce the
foregoing waiver and (ii) acknowledges that it and the other party have
been induced to enter into this Transaction, as applicable, by, among other
things, the mutual waivers and certifications provided herein.

 

Netting
of Payments. The provisions of Section 2(c) of
the Agreement shall not be applicable to this Transaction.

 

Basic
Representations. Section 3(a) of the
Agreement is hereby amended by the deletion of “and” at the end of Section 3(a)(iv);
the substitution of a semicolon for the period at the end of Section 3(a)(v) and
the addition of Sections 3(a)(vi), as follows:

 

Eligible
Contract Participant; Line of Business. Each party agrees and
represents that it is an “eligible contract participant” as defined in Section 1  (a)(12) of the U.S. Commodity Exchange
Act, as amended (“CEA”), this
Agreement and the Transaction thereunder are subject to individual negotiation
by the parties and have not been executed or traded on a “trading facility” as
defined in Section 1(a)(33) of the CEA, and it has entered into this
Confirmation and this Transaction in connection with its business or a line of
business (including financial intermediation), or the financing of its
business.

 

Acknowledgements:

 

(a)                                 The
parties acknowledge and agree that there are no other representations,
agreements or other undertakings of the parties in relation to this
Transaction, except as set forth in this Confirmation.

 

(b)                                The
parties hereto intend for:

 

(i)                                    Buyer
to be a “financial institution” as defined in Section 101(22) of Title 11
of the United States Code (the “Bankruptcy
Code”) and this
Transaction to be a “securities contract” as defined in Section 741(7) of
the Bankruptcy Code  and a “swap agreement” as defined in Section 101(53C)
of the Bankruptcy Code,  qualifying
for the protections of, among other sections, Sections 362(b)(6), 362 (b)(17),
546(e), 546(g), 555 and 560 of the Bankruptcy Code;

 

(ii)                                 a
party’s right to liquidate this Transaction and to exercise any other remedies
upon the occurrence of any Event of Default under the Agreement with respect to
the other party to constitute a “contractual right” as defined in the
Bankruptcy Code;

 

(iii)                              all payments for, under
or in connection with this Transaction, all payments for the Shares and the
transfer of such Shares to constitute “settlement payments” as defined in the
Bankruptcy Code.

 

(c)                                 The
parties acknowledge and agree that in the event of an Early Termination Date as
a result of an Event of Default that is within Counterparty’s control, the
amount payable under the Agreement will be a cash amount calculated as
described therein and that any delivery specified in this Transaction will no
longer be required.

 

Amendment
of Section 6(d)(ii). Section 6(d)(ii) of
the Agreement is modified by deleting the words “on the day” in the second line
thereof and substituting therefor “on the day that is three Local Business Days
after the day”. Section 6(d)(ii) is further modified by
deleting the words “two Local Business Days” in the fourth line thereof and
substituting therefor “three Local Business Days.”

 

18

 

Consent
to Recording. Each party consents to the recording of the
telephone conversations of trading and marketing personnel of the parties and
their Affiliates in connection with this Confirmation. To the extent that one
party records telephone conversations (the “Recording Party”) and the other
party does not (the “Non-Recording Party”), the Recording Party shall in the
event of any dispute, make a complete and unedited copy of such party’s tape of
the entire day’s conversations with the Non-Recording Party’s personnel
available to the Non-Recording Party. The Recording Party’s tapes may be used
by either party in any forum in which a dispute is sought to be resolved and
the Recording Party will retain tapes for a consistent period of time in
accordance with the Recording Party’s policy unless one party notifies the
other that a particular transaction is under review and warrants further
retention.

 

Disclosure.
Each party hereby acknowledges and agrees that Dealer has authorized Counterparty to
disclose this Transaction and any related hedging transaction between the
parties if and to the extent that Counterparty reasonably determines (after
consultation with Dealer) that
such disclosure is required by law or by the rules of the New York Stock
Exchange or any securities exchange. 
Notwithstanding the foregoing, effective from the date of commencement
of discussions concerning the Transaction, Counterparty and each of its
employees, representatives, or other agents may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the Transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to Counterparty relating to such tax treatment and tax
structure.

 

Severability.
If any term, provision, covenant or condition of this
Confirmation, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable in whole or in part for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Confirmation had been executed with the
invalid or unenforceable provision eliminated, so long as this Confirmation as
so modified continues to express, without material change, the original
intentions of the parties as to the subject matter of this Confirmation and the
deletion of such portion of this Confirmation will not substantially impair the
respective benefits or expectations of parties to this Agreement; provided,
however, that this severability provision shall not be applicable if any
provision of Section 2, 5, 6 or 13 of the
Agreement (or any definition or provision in Section 14 to the
extent that it relates to, or is used in or in connection with any such
Section) shall be so held to be invalid or unenforceable.

 

Affected
Parties. For purposes of Section 6(e) of the
Agreement, each party shall be deemed to be an Affected Party in connection
with Illegality and any Tax Event.

 

[Signatures follow on separate page]

 

19

 

Please confirm that the
foregoing correctly sets forth the terms of our agreement by executing the copy
of this Confirmation enclosed for that purpose and returning it to us.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  MERRILL LYNCH FINANCIAL MARKETS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Fran Jacobson

  	
   

  
	
   

  	
  Name: Fran
  Jacobson

  
	
   

  	
  Title:
  Authorized Signatory

  

 

	
  Confirmed as of the date first above written:

  
	
  AAR CORP.

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Timothy J. Romenesko

  	
   

  	
   

  
	
  Name: Timothy J. Romenesko

  
	
  Title: President & COO

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and agreed as to matters to the Agent:

  	
   

  
	
   

  	
   

  
	
  MERRILL LYNCH, PIERCE, FENNER & SMITH
  INCORPORATED

  
	
   

  	
   

  
	
  Solely in its capacity as Agent hereunder

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Angelina Lopes

  	
   

  	
   

  
	
  Name: Angelina Lopes

  
	
  Title: Authorized Signatory

  
					

 

 

:Exhibit 10.8

 

[***] DENOTES
CONFIDENTIAL MATERIALS OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

 

CONFIDENTIAL LICENSE AGREEMENT

FOR THE WiiTM CONSOLE

(EEA, AUSTRALIA, AND NEW ZEALAND)

 

THIS
LICENSE AGREEMENT (“Agreement”) is entered into between NINTENDO CO., LTD. (“NINTENDO”)
at 11-1 Kamitoba Hokotate-cho, Minami-ku, Kyoto, Japan 601-8501,
Attn:  General Manager, International Business Administration
Department (Fax:  81.75.662.9619), and ACTIVISION, INC., a
corporation of Delaware, and its subsidiaries (Activision Publishing, Inc.,
a corporation of Delaware, Activision UK, Ltd., a limited company of the United
Kingdom; ATVI France, S.A.S., a corporation of France; Activision GmbH, a
corporation of Germany, and Activision Pty., Ltd., a limited company of
Australia) (jointly and severally “LICENSEE”) at 3100 Ocean Park Blvd., Santa
Monica, CA 90405, Attn: Mr. George Rose (Fax: 310.255.2152).  NINTENDO and LICENSEE agree as follows:

 

1.             RECITALS

 

1.1           NINTENDO designs, develops,
manufactures, markets and sells advanced design, high-quality video game
systems, including the WiiTM video game console (“WiiTM”).

 

1.2           LICENSEE desires use
of the highly proprietary programming specifications, unique and valuable
security technology, trademarks, copyrights and other valuable intellectual
property rights of NINTENDO, which rights are only available for use under the
terms of a license agreement, to develop, have manufactured, advertise, market
and sell video game software for play on WiiTM.

 

1.3           NINTENDO 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 text and design
specifications for the Game Disc label and the Printed Materials in the format
specified by NINTENDO in the Guidelines.

 

2.2           “Bulk Goods” means Game Discs printed
with the Game Disc label portion of the Artwork for delivery to LICENSEE
without Printed Materials or other packaging.

 

2.3           “Check Disc(s)” means the
pre-production Game Discs to be produced by NINTENDO.

 

2.4           “Confidential Information” means the
information described in Section 8.1.

 

2.5           “Development Tools” means the
development kits, programming tools, emulators and other materials of NINTENDO,
or third parties authorized by NINTENDO, that may be used in the development of
Games under this Agreement.

 

2.6           “Effective Date” means the date that LICENSEE
placed its first order for Licensed Products of October 24, 2006.

 

2.7           “Finished Product(s) means the
fully assembled Game Disc with a Game Disc label, Printed Materials, and packed
in a plastic storage case;

 

2.8           “Game Disc(s)” means custom optical
discs for play on WiiTM on which a Game has been stored.

 

2.9           “Game(s)” means any interactive
programs (including source and object/binary code) developed to be compatible
with WiiTM.

 

1

 

2.10         “Guidelines” means the then-current
version of “WiiTM Programming Guidelines;” “Licensee Packaging Guidelines” pertaining
to the layout, trademark usage and requirements of the Game Disc label,
instruction manual and Game Disc packaging; “Marketing Materials”; “Nintendo
Trademark Guidelines;” “Guidelines on Ethical Content”; and  “Nintendo WiiTM
Software Submission Requirements,” together with other guidelines provided by NINTENDO
to LICENSEE from time to time.  The
Guidelines on Ethical Content are attached as Annex A, and the remainder
of the Guidelines have been provided to LICENSEE independent of this
Agreement.  The Guidelines may be changed
or updated from time to time without notice, and the versions current from time
to time will be available on request from NINTENDO.

 

2.11         “Independent Contractor” means any
individual or entity that is not an employee of LICENSEE, including any
independent programmer, consultant, contractor, board member or advisor.

 

2.12         “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 WiiTM including
NintendoTM, WiiTM, Official Nintendo Seal of QualityTM,
and MiiTM, (b) select trade dress associated with WiiTM and
licensed video games for play thereon, (c) Proprietary Rights in the
Security Technology employed in the Games or Game Discs by Nintendo, (d) rights
in the Development Tools for use in developing the Games, excluding, however,
rights to use, incorporate or duplicate select libraries, protocols and/or
sound or graphic files associated with the Development Tools which belong to
any third party and for which no additional licenses or consents are required, (e) patents,
patent applications, design registrations, utility models or copyrights which
may be associated with the Game Discs or Printed Materials, (f) copyrights
in the Guidelines, and (g) other Proprietary Rights of Nintendo in the
Confidential Information.

 

2.13         “Licensed Products” means (a) Bulk
Goods, and/or (b) Finished Products after being assembled and packaged with
the Printed Materials in accordance with the Guidelines.

 

2.14         “Marketing Materials” means marketing,
advertising or promotional materials developed by or for LICENSEE (or subject
to LICENSEE’s approval) that 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,
print media and all audio or video content other than the Game that is to be
included on the Game Disc.

 

2.15         “NDA” means the non-disclosure
agreement related to WiiTM previously entered into between NINTENDO and/or NOA
and LICENSEE.

 

2.16         “NOA” means NCL’s subsidiary, Nintendo
of America Inc. of Redmond, Washington, USA.

 

2.17         “Notice” means any notice permitted or
required under this Agreement.  All Notices
shall be sufficiently given when (a) personally served or delivered, or (b) transmitted
by facsimile, with an original sent concurrently by mail, or (c) deposited,
carriage 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, or (d) transmitted by e-mail with an express
written acknowledgement of receipt sent personally by or on behalf of the
recipient (which shall include any automated reply).  Notice shall be deemed effective upon the
earlier of actual receipt or two (2) business days after transmittal,
provided, however, any Notice received after the recipient’s normal business
hours will be deemed received on the next business day.

 

2.18         “Price Schedule” means the then-current
version of NINTENDO’s schedule of purchase prices and minimum order quantities
for the Finished Products and the Bulk Goods. 
The Price Schedule has been provided to LICENSEE independent of this
Agreement and may be changed or updated from time to time without notice, and
the version current from time to time will be available on request from
NINTENDO.

 

2

 

2.19         “Printed Materials” means title page,
instruction booklet, precaution booklet, and optional printed materials.

 

2.20         “Promotional Disc(s)” means custom
optical discs compatible with WiiTM that incorporate select game promotional or
supplemental materials, as may be specified or permitted in the Guidelines.

 

2.21         “Proprietary Rights” means any rights
or applications for rights owned, licensed or otherwise held in patents, patent
applications, utility models, registered design rights, unregistered design
rights, trademarks, service marks, copyrights, and neighboring rights,
semiconductor chip layouts or masks, database rights, trade secrets, trade
dress, get up, moral rights and publicity rights, together with all inventions,
discoveries, ideas, know-how, data, information, processes, methods,
procedures, formulas, drawings and designs, computer programs, software source
code and object code, and all amendments, modifications, and improvements
thereto for which such patents, patent applications, utility models, registered
design rights, unregistered design rights, trademarks, service marks, copyrights,
and neighboring rights, semiconductor chip layouts or masks, database rights, trade
secrets, trade dress, get up, moral rights or publicity rights may exist or may
be sought and obtained in the future.

 

2.22         “Rebate Program” means any then-current
version of NINTENDO’s optional rebate program, establishing select terms for
price rebates under this Agreement.

 

2.23         “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.

 

2.24         “Security Technology” means the highly
proprietary security features of the WiiTM and the Licensed Products to minimize
the risk of unlawful copying and other unauthorized or unsafe usage, including,
without limitation, any security signature, bios, data scrambling, password,
hardware security apparatus, watermark, hologram, encryption, digital rights
management system, copyright management information system, proprietary
manufacturing process or any feature which obstructs piracy, limits unlawful,
unsafe or unauthorized use, or facilitates or limits compatibility with other
hardware, software, accessories or peripherals, or with respect to a video game
system other than the WiiTM, or limits distribution outside of the Territory.

 

2.25         “Sole License” means a license under
which only the licensor and a single licensee can utilize the subject matter of
the license.

 

2.26         “Term” means three (3) years from
the Effective Date.

 

2.27         “Territory” means any and all countries
within the European Economic Area; namely Austria, Belgium, Bulgaria, Cyprus,
Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta,
the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,
Sweden, and the United Kingdom.  The
Territory shall also include Australia, New Zealand, Russia, Switzerland and
Turkey.  NINTENDO may add additional
countries to the Territory upon written notice to LICENSEE.

 

2.28         “TM” means trademark of NINTENDO,
whether registered or not.

 

2.29         “Wii Network Services” means and
includes the Wii Shop Channel Services, WiiTMConnect24, and any related services
and material delivered to a consumer’s WiiTM console over the Internet.

 

3.             GRANT
OF LICENSE; LICENSEE RESTRICTIONS

 

3.1           Limited License Grant.  For the Term and for the Territory, NINTENDO
grants to LICENSEE a nonexclusive, nontransferable, limited license to use the
Intellectual Property Rights, for the purpose of and to the

 

3

 

extent
necessary, to develop (or have developed on LICENSEE’s behalf) Games for
manufacture, advertising, marketing and sale by LICENSEE as Licensed Products,
subject to the terms and conditions of this Agreement.  This license is royalty-free.

 

3.2           LICENSEE
Acknowledgement.  LICENSEE’s
use of the Intellectual Property Rights shall not create any right, title or
interest of LICENSEE therein.  LICENSEE is
authorized and permitted to develop Games, and have manufactured, advertise,
market, and sell Licensed Products, only for play on WiiTM and only in
accordance with this Agreement.  In the
event that LICENSEE challenges NINTENDO’s ownership or the validity of the
Intellectual Property Rights, NINTENDO may terminate this Agreement without any
notice or procedure.

 

3.3           Restrictions on
License Grant.  NINTENDO
does not guarantee that the hardware for the WiiTM system is distributed
throughout the Territory.  Moreover, the
present limited license to LICENSEE does not extend to the use of the
Intellectual Property Rights for the following purposes:

 

(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 WiiTM systems, or between WiiTM
and 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)           authorize or permit any online
activities involving a Game, including, without limitation, multiplayer,
peer-to-peer or online play, except as expressly permitted by NINTENDO in
writing;

 

(c)           modify, install or operate a Game on
any server or computing device for the purpose of or resulting in the rental,
lease, loan or other grant of remote access to the Game;

 

(d)           emulate, interoperate, interface or
link a Game for operation or use with any hardware or software platform,
accessory, computer language, computer environment, chip instruction set, consumer
electronics device or device other than WiiTM, the Nintendo DS system, the
Development Tools or such other Nintendo system as NINTENDO may authorize in
the Guidelines;

 

(e)           embed, incorporate, or store a Game
in any media or format except the optical disc format utilized by WiiTM, 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 disable, obstruct, circumvent or
otherwise diminish the effectiveness or operation of the Security Technology;

 

(g)           utilize the Intellectual Property
Rights to design or develop any interactive video game program, except as
authorized under this Agreement;

 

(h)           manufacture or reproduce a Game
developed under this Agreement, except through NINTENDO; or

 

(i)            Reverse Engineer or assist in
Reverse Engineering all or any part of WiiTM, including the hardware, software
(embedded or not) or the Security Technology, except as specifically permitted
under the laws and regulations applicable in the Territory.

 

3.4           Development
Tools.  NINTENDO and NOA may lease,
loan or sell Development Tools, including any improvements made by NINTENDO or
NOA from time to time, to LICENSEE to assist in the development of Games under
this Agreement on such terms as may be agreed between the parties.  Ownership and use of any

 

4

 

Development
Tools, whether provided by NINTENDO or NOA, prior to or during the Term hereof,
shall be subject to the terms of this Agreement and any separate license or
purchase agreement required by NINTENDO or any third party licensing the
Development Tools.  LICENSEE acknowledges
the respective interests of NINTENDO, and in the case of third-party
Development Tools, such third parties, 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.  Any
license to LICENSEE to use the Development Tools does not extend to:  (a) use of the Development Tools for any
purpose except the design and development of Games under this Agreement, (b) reproduction
or creation of derivatives of the Development Tools, except in association with
the development of Games under this Agreement, (c) Reverse Engineering of
the Development Tools (except as specifically permitted under the laws and/or
regulations applicable in the Territory), or (d) selling, leasing, assigning,
lending, licensing, encumbering or otherwise transferring the Development
Tools.  Anything developed or derived by
LICENSEE as a result of a study of the performance, design or operation of any Nintendo
Development Tools shall be considered a derivative work of the Intellectual
Property Rights, but may be retained and utilized by LICENSEE in connection
with this Agreement.  Unless LICENSEE can
demonstrate that such derivative work has one or more applications that are
independent of and separate from the Intellectual Property Rights (“Independent
Applications”), it shall be deemed to have granted NINTENDO and NOA an
indefinite, worldwide, royalty-free, transferable and Sole License (including
the right to sub-license) to such derivative work.  To the extent that LICENSEE can demonstrate
one or more Independent Applications, LICENSEE shall be deemed to have granted
to NINTENDO and NOA a royalty-free and transferable non-exclusive License
(including the right to sub-license) in relation to such Independent
Applications for the Term.  Anything
developed or derived by LICENSEE as a result of a study of the performance,
design or operation of any third-party Development Tools shall be governed by
the terms of the license agreement applicable to such Development Tools.  Notwithstanding any referral or information provided or
posted regarding third-party Development Tools, NINTENDO and NOA make no
representations or warranties with regard to any such third-party Development
Tools.  LICENSEE acquires and utilizes third-party Development
Tools at its own risk.

 

3.5           Games Developed for Linked Play on
Two Systems.  In the event the
Guidelines permit LICENSEE to develop a Game for simultaneous or linked play on
WiiTM and on another Nintendo video game system, LICENSEE shall be required to
acquire and maintain with NINTENDO such additional licenses as are necessary for
the use of the Proprietary Rights associated with such other Nintendo video
game system.

 

3.6           In-Game Advertising.  LICENSEE shall not include advertising or
product placements for products or services of third parties, whether in the
Game, as separate content on a Game Disc (e.g., a trailer), or in the Printed
Materials, without NINTENDO’s prior written consent.

 

3.7           Use of MiiTM Characters.  LICENSEE shall not develop any Game that
permits NINTENDO’s MiiTM characters to appear in the Game without NINTENDO’s
prior written consent.

 

3.8           Sending Data to Consumers.  LICENSEE shall not, without the prior written
consent of NINTENDO, send any data, content, messages, advertising, or other
communications of any kind to any consumer’s WiiTM console through the WiiTM
Network Services or otherwise.

 

3.9          Downloadable Content.  If LICENSEE desires to develop Games or
updates/additions of any kind for any Licensed Product, to be downloaded to
consumers through the Wii Network Services, the terms and conditions of such
development shall be separately agreed in writing between the parties.  LICENSEE acknowledges that the rights granted
herein do not include the right to use the Intellectual Property Rights to
develop downloadable content.

 

4.             SUBMISSION
AND APPROVAL OF GAME AND ARTWORK

 

4.1           Submission of a Completed Game to NINTENDO.  Upon completion of a Game, LICENSEE shall
deliver a prototype of the Game to NINTENDO in a format specified in the
Guidelines.  Delivery shall be made in
accordance with the methods set forth in the Guidelines.  Each Submission shall include such other
information or documentation deemed necessary by NINTENDO, including, without
limitation, a complete set of written user

 

5

 

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.  LICENSEE must establish
that the Game and any other content included on the Game Disc complies with the
guidelines of the Pan European Game
Information System (PEGI), the Unterhaltungssoftware Selbstkontrolle (USK), the
Office of Film and Literature Classification (OFLC), or any other national or
regional game rating system that NINTENDO may accept, as applicable.  LICENSEE shall be responsible for the
submission of the Game to the appropriate national or regional game rating
organization and shall provide NINTENDO with a statement or certificate in
writing from the relevant organization, confirming the rating for the
Game.  Where any such game has been rated
as being suitable only for players aged 18 and over (or an equivalent rating),
LICENSEE must submit a certificate in writing that confirms the game is rated
as no higher than “M” (Mature) by the Entertainment Software Rating Board
(ESRB) of the U.S.  [***]

 

4.2           Testing of a Completed Game.  Upon submission of a completed Game, NINTENDO
shall promptly test the Game with regard to its technical compatibility with,
and error-free operation on, WiiTM utilizing the lot check process.  Within a reasonable period of time after
receipt, NINTENDO shall approve or disapprove such Game.  If a Game is disapproved, NINTENDO shall
specify in writing the reasons for such disapproval and state what corrections
are necessary.  After making the
necessary corrections, LICENSEE shall submit a revised Game to NINTENDO for
testing.  NINTENDO shall not unreasonably
withhold or delay its approval of any Game. 
Neither the testing nor approval of a Game by NINTENDO shall relieve
LICENSEE of its sole responsibility for the development, quality and operation
of the Game or in any way create any warranty by NINTENDO relating to any
Licensed Product.

 

4.3           Production of Check Discs.  By submission of a completed Game to NINTENDO
in accordance with Section 4.1, LICENSEE authorizes NINTENDO to proceed
with production of Check Discs for such Game. 
If NINTENDO approves a Game, it shall promptly, and without further
notification to or instruction from LICENSEE, submit such Game for the
production of Check Discs.  Unless
otherwise advised by LICENSEE, following production of the Check Discs, NINTENDO
shall deliver to LICENSEE approximately ten (10) Check Discs for content
verification, testing and final approval by LICENSEE.

 

4.4           Approval or Disapproval of Check
Discs by LICENSEE.  If, after review
and testing, LICENSEE approves the Check Discs, it shall promptly transmit to NINTENDO
a signed authorization for production in the form specified in the
Guidelines.  If LICENSEE does not approve
the sample Check Discs for any reason, LICENSEE shall advise NINTENDO in
writing and may, after undertaking any necessary changes or corrections,
resubmit the Game to NINTENDO for approval in accordance with the procedures
set forth in this Section 4.  The
absence of a signed authorization form from LICENSEE within five (5) days
after delivery of the Check Discs to LICENSEE shall be deemed disapproval of
such Check Discs.  Production of any
order for Finished Goods or Bulk Goods shall not proceed without LICENSEE’s
signed authorization.

 

4.5           Cost of Check Discs and Disc
Stamper.  If LICENSEE:  (a) disapproves the Check Discs for any
reason (except if the disapproval is due to defects in or failure of the Check
Discs due to NINTENDO’s act, error or omission); (b) fails to order the
minimum order quantity of any Game approved by NINTENDO within six (6) months
after the date the Game was first approved by NINTENDO; or (c) submits a
revised version of the Game to NINTENDO after production of such Game has
commenced, LICENSEE shall reimburse NINTENDO (or its designee) for the
reasonable estimated cost of the production of the Check Discs, including the
cost of the disc stamper.  The payment
will be due (i) thirty (30) days after NINTENDO’s written notification to
LICENSEE of the Check Disc fee due NINTENDO because of LICENSEE’s failure to
approve such Check Disc; (ii) six (6) months after the date the Game
was first approved by NINTENDO; or (iii) upon the subsequent submission by
LICENSEE of a revised version of the Game to NINTENDO, as the case may be.

 

6

 

4.6           Submission and Approval of Artwork.  Prior to submitting a completed Game to NINTENDO
under Section 4.1, LICENSEE shall submit to NINTENDO all Artwork for the
proposed Licensed Product.  Within ten (10) business
days of receipt, NINTENDO shall approve or disapprove the Artwork.  If any Artwork is disapproved, NINTENDO 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 NINTENDO for approval.  NINTENDO
shall not unreasonably withhold or delay its approval of any Artwork.  The approval of the Artwork by NINTENDO 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 the
Licensed Product by NINTENDO.  All
Artwork must be approved prior to submitting an order for the Bulk Goods or
Finished Products, and LICENSEE shall not produce any Printed Materials for
commercial distribution until such Artwork or Finished Products has been
approved by NINTENDO.

 

4.7           Artwork for Bulk Goods.  If LICENSEE intends to submit an order for
Bulk Goods, all Artwork and other materials to be included with the Licensed
Product shall be submitted to NINTENDO in accordance with Section 4.6
herein.  No Printed Materials shall be
produced by LICENSEE until such Artwork has been approved by NINTENDO.

 

4.8           Promotional Discs.  In the event NINTENDO issues Guidelines in
the future that permit LICENSEE to develop and distribute Promotional Discs,
either separately or as a part of the Licensed Product, the content and
specifications of such Promotional Disc shall be subject to all of the terms
and conditions of this Agreement, including, without limitation, the Guidelines,
the Price Schedule and the submission and approval procedures provided for in
this Section 4.

 

5.             ORDER
PROCESS, PURCHASE PRICE, PAYMENT AND DELIVERY

 

5.1           Submission of Orders by LICENSEE.  After receipt of NINTENDO’s approval for a
Game and Artwork, LICENSEE may at any time submit a written purchase order to NINTENDO
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 or additional terms of such
purchase order or any other written documentation or verbal instruction from
LICENSEE.  All orders shall be subject to
acceptance by NINTENDO or its designee.

 

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 NINTENDO’s then-current Price Schedule.  Unless otherwise specifically provided for,
the purchase price includes the cost of manufacturing a single Game Disc.  No taxes, duties, import fees or other
tariffs related to the development, manufacture, import, marketing or sale of
the Licensed Products (except for taxes imposed on NINTENDO’s income) are
included in the purchase price and all such taxes are the responsibility of
LICENSEE.  The Price Schedule is subject
to change by NINTENDO at any time without Notice, provided however, that any
price increase shall be applicable only to purchase orders submitted, paid for,
and accepted by NINTENDO after the date of the price increase.

 

5.3           Payment.  Upon placement of an order with NINTENDO,
LICENSEE shall pay the full purchase price either (a) by tender of an
irrevocable letter of credit in favor of NINTENDO (or its designee) and payable
at sight, issued by a bank acceptable to NINTENDO and confirmed, if requested
by NINTENDO, at LICENSEE’s expense, or (b) in cash, by wire transfer to an
account designated by NINTENDO.  All
letters of credit shall comply with NINTENDO’s written instructions and all
associated banking charges shall be for LICENSEE’s account.

 

5.4           Delivery of Licensed Products.  NINTENDO shall deliver the Finished Products and
Bulk Goods ordered by LICENSEE to LICENSEE FOB Japan, CIP European Destination or
ex-warehouse Grossostheim, per the terms in the Price Schedule. Also per the
Price Schedule, [***]. Upon mutual
consent of NINTENDO and LICENSEE, orders may be delivered in partial shipments
with a minimum shipment quantity as specified in the Price Schedule.  Such orders shall be delivered only to
countries 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, per Incoterms 2000.

 

7

 

5.5           Rebate Program.  NINTENDO, at its sole option, may elect to
offer LICENSEE a Rebate Program.  The
terms and conditions of any Rebate Program shall be subject to NINTENDO’s sole
discretion.  LICENSEE shall not be
entitled to offset any claimed rebate amount against other amounts owing NINTENDO.  No interest shall be payable by NINTENDO to
LICENSEE on any claimed rebate.  The
Rebate Program is subject to change or cancellation by NINTENDO at any time
without Notice.

 

6.             MANUFACTURE
OF THE LICENSED PRODUCT

 

6.1           Manufacturing.  Given NINTENDO’s ownership of valuable
Intellectual Property Rights, NINTENDO shall be the exclusive source for the
manufacture of the Game Discs, Check Discs and Promotional Discs, with
responsibility for 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.  Upon acceptance by NINTENDO of a purchase
order from LICENSEE and receipt of payment as provided for at Section 5.3
herein, NINTENDO shall (through its suppliers and subcontractors) arrange for
manufacturing.

 

6.2           Security Features.  The final release version of the Game, the
Game Disc and the Printed Materials shall include such Security Technology as NINTENDO,
in its sole discretion, deems necessary or appropriate to (a) reduce the
risk of unlawful copying or other unlawful, unsafe or unauthorized uses, (b) protect
the Proprietary Rights of NINTENDO and of the LICENSEE, (c) promote
consumer confidence, and (d) increase the quality, reliability or
operation of WiiTM.

 

6.3           Printed Materials for Bulk Goods.
Upon delivery to LICENSEE of Bulk Goods, LICENSEE shall assemble the Printed
Materials and Bulk Goods into the Licensed Products in accordance with the
Guidelines.  No other materials, items,
products or packaging may be included or assembled with the Bulk Goods without
NINTENDO’s prior written consent.  Bulk
Goods may be sold or distributed by LICENSEE only when fully assembled in
accordance with the Guidelines.

 

6.4           Sample Printed Materials.  Within a reasonable period of time after
LICENSEE’s assembly of an initial order for Bulk Goods for a Game title,
LICENSEE shall provide NINTENDO with (a) two (2) samples of the
fully assembled Licensed Product, and (b) twenty (20) samples of the LICENSEE
produced Printed Materials (excluding the plastic disc storage case, precaution
booklet, and other optional printed materials) for such Game title.

 

6.5           Retention of Sample Licensed
Products by NINTENDO.  NINTENDO may,
at its own expense, manufacture reasonable quantities of the Game Discs or the
Licensed Products, and make a reasonable number of copies of the Printed
Materials, not to exceed fifty (50) copies, to be used for archival purposes,
legal proceedings against infringers of the Intellectual Property Rights, and
for other lawful purposes (but not for resale).

 

7.             MARKETING
AND ADVERTISING

 

7.1           Approval of Marketing Materials.  LICENSEE represents and warrants that the
Printed Materials and the Marketing Materials shall be of high quality and
comply with (a) the Guidelines, (b) the guidelines of the PEGI, and (c) all
applicable laws and regulations and official codes of practice in those
jurisdictions in the Territory where they will be used or distributed,
including without limitation all applicable privacy laws.  To protect NINTENDO’s valuable Intellectual
Property Rights, to prevent the dilution of NINTENDO’s trademarks, and to avoid
use of the licensed Intellectual Property Rights giving rise to any implication
of NINTENDO’s sponsorship, association, approval or endorsement where this is
not the case, prior to actual use or distribution, LICENSEE shall submit to NINTENDO
for review samples of all proposed Marketing Materials.  NINTENDO shall, within ten (10) business
days of receipt, approve or disapprove of the quality of such samples.  If any of the samples are disapproved, NINTENDO
shall specify the reasons for such disapproval and state what corrections
and/or improvements are necessary.  After
making the necessary corrections and/or improvements, LICENSEE shall submit
revised samples for approval by NINTENDO. 
NINTENDO shall not unreasonably withhold or delay its approval of any
proposed Marketing Materials.  No
Marketing Materials shall be used or distributed by LICENSEE without NINTENDO’s
prior written approval.

 

8

 

7.2           No Bundling.  To protect NINTENDO’s valuable Intellectual
Property Rights, to prevent the dilution of NINTENDO’s trademarks and to avoid
use of the licensed Intellectual Property Rights giving rise to any implication
of NINTENDO’s sponsorship, association, approval or endorsement where this is
not the case, LICENSEE shall not, without NINTENDO’s prior written approval,
market or distribute any Games or Game Discs that have been bundled with (a) any
peripheral designed for use with WiiTM that has not been licensed or approved in
writing by NINTENDO, provided that LICENSEE is responsible for ensuring that
any such peripheral shall comply with all applicable laws and regulations in
the Territory, or (b) any other product or service where NINTENDO’s
association, approval or endorsement might be suggested by bundling the
products or services.

 

7.3           Warranty and Repair.  LICENSEE shall provide the original consumer
with a minimum one hundred eighty (180) day (or such longer minimum period as
may be required by applicable law) limited warranty on all Licensed
Products.  LICENSEE shall also provide
reasonable product service, including out-of-warranty service, for all Licensed
Products.  LICENSEE shall make such
warranty and repair information available to consumers as required by
applicable law.

 

7.4           Business Facilities.  LICENSEE agrees to develop and maintain sufficient
customer service, either directly or through a third party, to adequately
support the Licensed Products.

 

7.5           No Sales Outside the Territory.  LICENSEE covenants that it shall not market,
sell, offer to sell, import or distribute the Licensed Products outside the
Territory, or within the Territory when LICENSEE has actual or constructive
knowledge that a subsequent destination of the Licensed Product is outside the
Territory.

 

7.6           Defects and Recall.  In the event of a material programming defect
in a Licensed Product that would, in NINTENDO’s reasonable judgment,
significantly impair the ability of a consumer to play the Game, NINTENDO may,
after consultation with LICENSEE, require the LICENSEE to recall the Licensed
Product and undertake suitable repairs or replacements.

 

7.7           NINTENDO Promotional Materials,
Publications and Events.  With a view
to improving the competitiveness of the video game products consisting of
Nintendo video game systems and services and compatible software published by
LICENSEE and others, at its option and expense, NINTENDO may (a) utilize
screen shots, Artwork and information regarding the Licensed Products in all
NINTENDO published or officially licensed magazines, official NINTENDO sponsored
web sites or other advertising, promotional or marketing media, which promote NINTENDO
products, services or programs, and (b) exercise public performance rights
in the Games and use related trademarks and Artwork in connection with NINTENDO
sponsored contests, tours, conventions, trade shows, press briefings and
similar events which promote such video game products.   NCL shall submit to LICENSEE for review
printed materials and related art for the Game that NCL intends to use in
publications or media or marketing programs.

 

7.8           Nintendo Gateway System.  To promote and increase demand for games on
Nintendo video game systems, NINTENDO licenses select games in various non-coin
activated commercial settings such as commercial airlines, cruise ships, rail
systems and hotels, where customers play games on specially adapted Nintendo
video game hardware referred to as the “Nintendo Gateway System”.  If NINTENDO identifies a Game for possible
license on the Nintendo Gateway System, the parties agree to conduct good faith
negotiations to determine commercially reasonable terms for such participation.

 

8.             CONFIDENTIAL
INFORMATION

 

8.1           Definition.  Confidential Information means information
provided to LICENSEE by NINTENDO or any third party working with NINTENDO relating
to the hardware and software for WiiTM or the Development Tools, including, but
not limited to, (a) all current or future information, know-how,
techniques, methods, tools, emulator hardware or software, software development
specifications, proprietary manufacturing processes and/or trade secrets,

 

9

 

(b) any
information on inventions, patents, or patent applications, (c) any
business, legal, marketing, pricing or sales data or information, and (d) any
other information or data relating to development, design, operation,
manufacturing, marketing or sales. 
Confidential Information shall include all confidential information
disclosed, whether in writing, orally, visually, or in the form of drawings,
technical specifications, software, samples, pictures, models, recordings, or
other tangible items which contain or manifest, in any form, the above listed
information.  Confidential Information
shall not include (i) data and information which was in the public domain
prior to LICENSEE’s receipt of the same hereunder, or which subsequently
becomes part of the public domain by publication or otherwise, except by
LICENSEE’s wrongful act or omission, (ii) data and information which
LICENSEE can demonstrate, through written records kept in the ordinary course
of business, was in its possession without restriction on use or disclosure,
prior to its receipt of the same hereunder, and was not acquired directly or
indirectly from NINTENDO or NOA under an obligation of confidentiality which is
still in force, and (iii) data and information which LICENSEE can show was
received by it from a third party who did not acquire the same directly or
indirectly from NINTENDO or NOA and to whom LICENSEE has no obligation of
confidentiality.

 

8.2           Disclosures
Required by Law.  LICENSEE
shall be permitted to disclose Confidential Information if such disclosure is
required by an authorized governmental or judicial entity, provided that
LICENSEE shall notify NINTENDO at least thirty (30) days prior to such
disclosure, or such lesser period as may be needed to comply with such
requirement.  LICENSEE shall use its best
efforts to limit the disclosure to the greatest extent possible consistent with
LICENSEE’s legal obligations, and if required by NINTENDO, shall cooperate in
the preparation and entry of appropriate court orders limiting the persons to
whom Confidential Information may be disclosed and the extent of disclosure of
such Confidential Information.

 

8.3           Disclosure and
Use.  NINTENDO may provide LICENSEE
with highly confidential development information, Guidelines, Development
Tools, systems, specifications and related resources and information
constituting and incorporating the Confidential Information to assist LICENSEE
in the development of Games.  LICENSEE
agrees to maintain all Confidential Information as strictly confidential and to
use such Confidential Information only in accordance with this Agreement.  LICENSEE shall limit access to the
Confidential Information to LICENSEE’s employees having a strict need to know,
and shall advise such individuals of their obligation of confidentiality as
provided herein.  LICENSEE shall require
each such individual to retain in confidence the Confidential Information
pursuant to a written non-disclosure agreement with LICENSEE.  LICENSEE shall use its best efforts to ensure
that individuals who are permitted hereunder to work with or otherwise have
access to Confidential Information shall not disclose or make any unauthorized
use of the Confidential Information.

 

8.4           No Disclosure to
Independent Contractors. 
LICENSEE shall not disclose the Confidential Information, including
without limitation the Guidelines and Intellectual Property Rights, to any
Independent Contractor, nor permit any Independent Contractor to perform or
assist in development work for a Game, without the prior written consent of
NINTENDO.  Any Independent Contractor
seeking access to Confidential Information shall be required to enter into a
written non-disclosure agreement with NINTENDO or NOA that is no less restrictive
than the terms of this Section 8, and that expressly includes the
following language, prior to receiving any access to or disclosure of the
Confidential Information from either LICENSEE or NINTENDO:

 

“Independent Contractor may have access to highly-confidential and
proprietary information, intellectual property, and trade secrets of Nintendo
Co., Ltd. and/or Nintendo of America Inc. (collectively, “Nintendo”).  Independent Contractor expressly acknowledges
(i) the valuable nature of such materials; and (ii) Nintendo’s right,
title and interest in such materials. 
All such materials constitute confidential information under this
agreement and shall be treated by Independent Contractor as such.  Independent Contractor’s use of such
materials shall not create any right, title or interest of Independent
Contractor therein.  In the event that
Independent Contractor challenges Nintendo’s ownership or the validity of such
materials, Nintendo may terminate the agreement without any notice or
procedure.  Nintendo Co., Ltd. and
Nintendo of America Inc. are intended third-party beneficiaries of this
agreement.”

 

10

 

At
LICENSEE’s option, the written non-disclosure agreement may be with LICENSEE
rather than NINTENDO or NOA, in which case the form and substance of the
non-disclosure agreement must be acceptable to NINTENDO.  Also, in such case LICENSEE shall provide to
NINTENDO on a continuing basis a listing of all Independent Contractors who
have received or been granted access to Confidential Information along with
copies of the applicable written non-disclosure agreements.  In addition, LICENSEE shall take all
reasonable measures to ensure that its Independent Contractors fulfill the
requirements of the applicable written non-disclosure agreements.

 

LICENSEE
shall use its best efforts to ensure that its employees and Independent
Contractors working with or otherwise having access to Confidential Information
shall not disclose or make unauthorized use of the Confidential Information.  [***]

 

8.5           Agreement
Confidentiality.  LICENSEE
agrees that the terms, conditions and contents of this Agreement shall be
treated as Confidential Information.  Any
public announcement or press release regarding this Agreement or the release
dates for Games developed by LICENSEE under this Agreement shall be subject to NINTENDO’s
prior written approval.  The parties may
disclose this Agreement (a) to accountants, banks, financing sources,
lawyers, parent companies and related parties under substantially equivalent
confidentiality obligations, (b) in connection with any formal legal
proceeding for the enforcement of this Agreement, (c) as required by the
regulations of the government agencies in the Territory that regulate
publicly-traded securities, provided that all Confidential Information shall be
edited from such disclosures to the maximum extent allowed by such government
agencies, (d) in response to lawful process, subject to court order
limiting the persons to whom Confidential Information may be disclosed and the
extent of disclosure of such Confidential Information, approved in advance by
NINTENDO, and (e) to a third party proposing to enter into a business
transaction with LICENSEE or with NINTENDO, but only to the extent reasonably necessary
for carrying out the proposed transaction and only under terms of mutual
confidentiality.

 

8.6           Notification
Obligations.  LICENSEE
shall promptly notify NINTENDO of the unauthorized use or disclosure of any
Confidential Information by LICENSEE or any of its employees, or any
Independent Contractor or its employees, and shall promptly act to recover any
such information and prevent further breach of the obligations herein.  The obligations of LICENSEE set forth herein
are in addition to and not in lieu of any other legal remedy that may be
available to NINTENDO under this Agreement or applicable law.

 

8.7           Continuing
Effect of the NDA.  The terms of
this Section 8 supplement the terms of the NDA, which shall remain in
effect.  In the event of a conflict
between the terms of the NDA and this Agreement, the provisions of this
Agreement shall control.

 

9.             REPRESENTATIONS
AND WARRANTIES

 

9.1           LICENSEE’s
Representations and Warranties.  LICENSEE represents and warrants that:

 

(a)           it is a duly organized and validly
existing corporation and has full authority to enter into this Agreement and to
carry out the provisions hereof,

 

(b)           the execution, delivery and
performance of this Agreement by LICENSEE does not conflict with any agreement
or understanding to which LICENSEE may be bound, and

 

(c)           excluding the Intellectual Property
Rights, LICENSEE is either (i) the sole owner of all right, title and
interest in and to the trademarks, copyrights and all other Proprietary Rights
incorporated into the Game or the Artwork or used in the development,
advertising, marketing and sale of the Licensed Products or the Marketing
Materials, or (ii) the holder of such rights, including trademarks,
copyrights and all other Proprietary Rights which belong to any third party but
have been licensed from such third party or an agent or licensee of a third
party, such as

 

11

 

a
collecting society, by LICENSEE, as are necessary for incorporation into the
Game or the Artwork or as are used in the development, advertising, marketing
and sale of the Licensed Products or the Marketing Materials under this
Agreement.

 

9.2           NINTENDO’s
Representations and Warranties.  NINTENDO represents and warrants that:

 

(a)           it is a duly organized and validly existing
corporation and has full authority to enter into this Agreement and to carry
out the provisions hereof, and

 

(b)           the execution, delivery and
performance of this Agreement by NINTENDO do not conflict with any agreement or
understanding to which NINTENDO may be bound.

 

9.3           INTELLECTUAL
PROPERTY RIGHTS DISCLAIMER.  NINTENDO (ON ITS OWN BEHALF AND ON BEHALF OF
ITS AFFILIATES, SUBSIDIARIES, LICENSORS, SUPPLIERS AND SUBCONTRACTORS)
EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES CONCERNING THE SCOPE OR
VALIDITY OF THE INTELLECTUAL PROPERTY RIGHTS. 
NINTENDO (ON ITS OWN BEHALF AND ON BEHALF OF ITS AFFILIATES,
SUBSIDIARIES, LICENSORS, SUPPLIERS AND SUBCONTRACTORS) EXPRESSLY DISCLAIMS ANY
WARRANTY THAT THE DESIGN, DEVELOPMENT, ADVERTISING, MARKETING OR SALE OF THE
LICENSED PRODUCTS 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 TO THE MAXIMUM EXTENT LEGALLY PERMISSIBLE.  ANY WARRANTY, CONDITION OR TERM THAT MAY BE
PROVIDED IN ANY APPLICABLE PROVISION OF ANY LAW OR REGULATION IN THE TERRITORY
GOVERNING COMMERCIAL ACTIVITY, OR ANY OTHER COMPARABLE LAW OR REGULATION, IS
EXPRESSLY DISCLAIMED.  LICENSEE HEREBY
ASSUMES THE RISK OF INFRINGEMENT.

 

9.4           GENERAL
DISCLAIMER.  NINTENDO (ON
ITS OWN BEHALF AND ON BEHALF OF ITS AFFILIATES, SUBSIDIARIES, LICENSORS,
SUPPLIERS AND SUBCONTRACTORS) EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES WITH
RESPECT TO THE LICENSED PRODUCTS, INCLUDING, WITHOUT LIMITATION, THE SECURITY
TECHNOLOGY.  LICENSEE PURCHASES AND
ACCEPTS ALL LICENSED PRODUCTS ON AN “AS IS” AND “WHERE IS” BASIS.  NINTENDO (ON ITS OWN BEHALF AND ON BEHALF OF
ITS AFFILIATES, SUBSIDIARIES, LICENSORS, SUPPLIERS AND SUBCONTRACTORS)
EXPRESSLY DISCLAIMS ALL WARRANTIES, CONDITIONS OR OTHER TERMS OF ANY KIND UNDER
THE APPLICABLE LAWS OF ANY COUNTRY, EXPRESS OR IMPLIED, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A GENERAL OR PARTICULAR PURPOSE.

 

9.5           LIMITATION OF
LIABILITY.  TO THE
MAXIMUM EXTENT PERMITTED BY LAW, NEITHER NINTENDO NOR ITS AFFILIATES, SUBSIDIARIES,
LICENSORS, SUPPLIERS, OR SUBCONTRACTORS SHALL BE LIABLE FOR LOSS OF PROFITS, OR
FOR ANY SPECIAL, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF LICENSEE OR
ITS CUSTOMERS ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE BREACH OF THIS AGREEMENT BY NINTENDO, THE MANUFACTURE OF THE LICENSED
PRODUCTS OR THE USE OF THE LICENSED PRODUCTS ON ANY NINTENDO VIDEO GAME SYSTEM
BY LICENSEE OR BY ANY END USER.

 

10.          INDEMNIFICATION

 

10.1         Claim.  “Claim” means any and all third-party claims,
demands, actions, suits, proceedings, losses, liabilities, damages, expenses
and costs, including, without limitation, reasonable attorneys’ fees and costs
and any expenses incurred in the settlement or avoidance of any such
claim.  “Claim” shall specifically
include civil, criminal, and regulatory matters, and those brought by any third party (including governmental authorities or
agencies) under any national, subnational, or multinational law or regulation,
or the rules of any self-regulatory body (e.g., PEGI).

 

12

 

10.2         LICENSEE’s
Indemnification.  LICENSEE
shall indemnify and hold harmless NINTENDO (and any of its affiliates,
subsidiaries, licensors, suppliers, officers, directors, employees or agents)
from any Claims which are alleged to result from or be in connection with:

 

(a)           a breach by LICENSEE of any of the
provisions in this Agreement,

 

(b)           any infringement of a third party’s
Proprietary Rights as a result of the design, development, advertising,
marketing, sale or use of any aspect of the Licensed Products or the Marketing
Materials,

 

(c)           a defect, failure to warn, bodily
injury (including death), or other personal or property damage arising out of,
or in connection with, the design, development, advertising, marketing, sale or
use of any aspect of the Licensed Products, and

 

(d)           the
design, development, advertising, marketing, sale or use of any aspect of the
Licensed Products or the Marketing Materials.

 

NINTENDO
and LICENSEE shall give prompt Notice to the other of any Claim which is or
which may be subject to indemnification under this Section 10.  With respect to any such Claim, LICENSEE, as
indemnitor, shall have the right to select counsel and to control the defense
and/or settlement thereof.  NINTENDO may,
at its own expense, participate in such action or proceeding with counsel of
its own choice.  LICENSEE shall not enter
into any settlement of any Claim in which (a) NINTENDO has been named as a
party, or (b) Intellectual Property Rights have been asserted, without NINTENDO’s
prior written consent.  NINTENDO shall
provide reasonable assistance to LICENSEE in its defense of any Claim.

 

10.3         LICENSEE’s
Insurance.  LICENSEE shall,
at its own expense, obtain a comprehensive policy of general liability
insurance (including coverage for advertising injury and product liability Claims)
from an insurance company rated at least B+ by A.M. Best or a comparable
rating by another recognized insurance rating organization.  Such policy of insurance shall be in an
amount of not less than the equivalent of Five Million Dollars U.S. ($5,000,000
US) on a per-occurrence basis and shall provide for adequate protection against
any Claims.  Such policy shall name NINTENDO
as an additional insured and shall specify it may not be canceled without
thirty (30) days’ prior written Notice to NINTENDO.  A Certificate of Insurance shall be provided
to NINTENDO not later than the date of the initial order of Licensed Products
under this Agreement or within thirty (30) days of the Effective Date of this
Agreement, whatever date occurs later. 
If LICENSEE fails to provide NINTENDO with such Certificate of Insurance
or fails to maintain such insurance at any time during the Term and for a
period of two (2) years thereafter, NINTENDO, in its sole discretion may (a) terminate
this Agreement in accordance with Section 13.2 herein; and/or (b) secure
comparable insurance, at LICENSEE’s expense, for the sole benefit and
protection of NINTENDO.

 

10.4         Suspension of
Production.  In the event
NINTENDO deems itself at risk with respect to any Claim under this Section 10,
NINTENDO may, at its sole option, suspend production, delivery or order
acceptance for any Licensed Products, in whole or in part, pending resolution
of such Claim.

 

11.          PROTECTION OF PROPRIETARY RIGHTS

 

11.1         Joint Actions Against
Infringers.  LICENSEE and
NINTENDO may agree to jointly pursue cases of infringement involving the
Licensed Products, as such Licensed Products will contain Proprietary Rights
owned by each of them.  Unless the
parties otherwise agree, or unless the recovery is expressly allocated between
them by the court, in the event of such an action, any recovery shall be used
first to reimburse LICENSEE and NINTENDO for their respective reasonable
attorneys’ fees and costs, pro  rata, and any
remaining recovery shall be distributed to LICENSEE and NINTENDO, pro rata,
based upon the fees and costs incurred in bringing such action.

 

13

 

11.2         Actions by LICENSEE.  LICENSEE, without the consent of NINTENDO and
to the extent permitted by law, may bring any action or proceeding relating to
an infringement or potential infringement of LICENSEE’s Proprietary Rights in
the Licensed Products.  LICENSEE shall
make reasonable good faith efforts to inform NINTENDO of such actions in a
timely manner.  LICENSEE will have the
right to retain all proceeds it may derive from any recovery in connection with
such actions.

 

11.3         Actions by NINTENDO.  NINTENDO, without the consent of LICENSEE,
may bring any action or proceeding relating to an infringement or potential
infringement of NINTENDO’s Intellectual Property Rights in the Licensed
Products.  NINTENDO shall make, in a
timely manner, reasonable, good faith efforts to inform LICENSEE of such
actions likely to affect LICENSEE’s rights. 
NINTENDO will have the right to retain all proceeds it may derive from
any recovery in connection with such actions.

 

12.          ASSIGNMENT

 

12.1         Definition.  “Assignment” means every type and form of
assignment, transfer, sale, sublicense, delegation, encumbrance, pledge and/or
hypothecation of LICENSEE’s rights or obligations under this Agreement,
including, but not limited to, (a) a voluntary assignment, transfer, sale,
sublicense, delegation, encumbrance, pledge and/or hypothecation by LICENSEE of
all or any portion of its rights or obligations under this Agreement, (b) the
assignment, transfer, sale, sublicense, delegation, encumbrance, pledge and/or
hypothecation of all or any portion of LICENSEE’s rights or obligations under
this Agreement to or by LICENSEE’s trustee in bankruptcy, receiver, or other
individual or entity appointed to control or direct the business and affairs of
LICENSEE, (c) an involuntary assignment, transfer, sale, sublicense,
delegation, encumbrance, pledge or hypothecation of all or a portion of
LICENSEE’s rights or obligations under this Agreement, including but not
limited to a foreclosure by a third party upon assets of LICENSEE, (d) the
merger or consolidation of LICENSEE if LICENSEE is a corporation, and (e) any
other means or method whereby rights or obligations of LICENSEE under this
Agreement are sold, assigned or transferred to another individual or entity for
any reason.  Assignment also includes the
sale, assignment, transfer or other event affecting a change in the controlling
interest of LICENSEE, whether by sale, transfer or assignment of shares in
LICENSEE, or by sale, transfer or assignment of partnership interests in
LICENSEE, or otherwise.

 

12.2         No
Assignment by LICENSEE.  This
Agreement and the subject matter hereof are 
personal to LICENSEE.  No
Assignment of LICENSEE’s rights or obligations hereunder shall be valid or
effective without NINTENDO’s prior written consent, which consent may be
withheld by NINTENDO for any reason whatsoever in its sole discretion.  In the event of an attempted Assignment in
violation of this provision, NINTENDO shall have the right at any time, at its
sole option, to immediately terminate this Agreement.  Upon such termination, NINTENDO shall have no
further obligation under this Agreement to LICENSEE or to LICENSEE’s intended
or purported assignee.

 

12.3         Proposed Assignment.  Prior to any proposed Assignment of this
Agreement, LICENSEE shall give NINTENDO not less than thirty (30) days prior
written Notice thereof, which Notice shall disclose the name of the proposed
assignee, the proposed effective date of the proposed Assignment and the nature
and extent of the rights and obligations that LICENSEE proposes to assign.  NINTENDO may, in its sole discretion, approve
or disapprove such proposed Assignment. 
Unless written consent is given by NINTENDO to a proposed Assignment,
any attempted or purported Assignment shall be deemed disapproved and NINTENDO
shall have the unqualified right, in its sole discretion, to terminate this
Agreement at any time.  Upon termination,
NINTENDO shall have no further obligation under this Agreement to LICENSEE or
to LICENSEE’s intended or purported assignee.

 

12.4         LICENSEE’s Obligation of
Non-Disclosure.  LICENSEE shall not (a) disclose
NINTENDO’s Confidential Information to any proposed assignee of LICENSEE, or (b) permit
access to NINTENDO’s Confidential Information by any proposed assignee or other
third party, without the prior written consent of NINTENDO to such disclosure.

 

14

 

13.          TERM
AND TERMINATION

 

13.1         Term.  This Agreement shall commence on the
Effective Date and continue for the Term, unless earlier terminated as provided
for herein.

 

13.2         Default or Breach.  In the event that either party is in default
or commits a material breach of this Agreement, which is not cured within
thirty (30) days after Notice thereof, then this Agreement shall automatically
terminate on the date specified in such Notice.

 

13.3         Bankruptcy.  At NINTENDO’s option, this Agreement may be
terminated immediately and without Notice in the event that LICENSEE (a) makes
an assignment for the benefit of creditors, (b) becomes insolvent, (c) files
a voluntary petition for bankruptcy, (d) acquiesces to any involuntary
bankruptcy petition, (e) is adjudicated as a bankrupt, or (f) ceases
to do business.

 

13.4         Termination Other Than by Breach.  Upon the expiration of this Agreement or its
termination other than by LICENSEE’s breach, LICENSEE shall have a period of one
hundred eighty (180) days to sell any unsold Licensed Products.  All Licensed Products in LICENSEE’s control
following the expiration of such sell-off period shall be destroyed by LICENSEE
within ten (10) days and Notice of such destruction (with proof certified
by an officer of LICENSEE) shall be delivered to NINTENDO.

 

13.5         Termination by LICENSEE’s Breach.  If this Agreement is terminated by NINTENDO
as a result of a breach of its terms and conditions by LICENSEE, LICENSEE shall
immediately cease all distribution, advertising, marketing or sale of any
Licensed Products.  All Licensed Products
in LICENSEE’s control as of the date of such termination shall be destroyed by
LICENSEE within ten (10) days and Notice of such destruction (with proof
certified by an officer of LICENSEE) shall be delivered to NINTENDO.

 

13.6         Breach of NDA or other NINTENDO
License Agreements.  At NINTENDO’s
option, any breach by LICENSEE of (a) the NDA, or (b) any other
license agreement between NINTENDO and LICENSEE relating to the development of
games for any Nintendo video game system, which breach is not cured within the
time period for cure allowed under the applicable agreement (and which shall
give NINTENDO reasonable cause to believe that it needs to terminate this
Agreement so as to protect its legitimate business interests), shall be
considered a material breach of this Agreement entitling NINTENDO to terminate
this Agreement in accordance with Section 13.5 herein.

 

13.7         No Further Use of the Intellectual
Property Rights.  Upon expiration or
termination of this Agreement, LICENSEE shall cease all use of the Intellectual
Property Rights for any purpose, except as may be required in connection with
the sale of the Licensed Products authorized under Section 13.4
herein.  LICENSEE shall, within thirty
(30) days of expiration or termination, (a) return to NINTENDO all
Development Tools provided to LICENSEE by NINTENDO, and (b) return to NINTENDO
or destroy any and all copies of materials constituting, relating to, or
disclosing any Confidential Information, including but not limited to Guidelines,
writings, drawings, models, data, and tools, whether in LICENSEE’s possession
or in the possession of any past or present employee, agent or Independent Contractor
who received the information through LICENSEE. 
Proof of such return or destruction shall be certified by an officer of
LICENSEE and promptly provided to NINTENDO.

 

13.8         Termination by NINTENDO’s Breach.  If this Agreement is terminated by LICENSEE
as a result of a breach of its terms or conditions by NINTENDO, LICENSEE may
continue to sell the Licensed Products in the Territory until the expiration of
the Term, at which time the provisions of Section 13.4 shall apply.

 

14.          GENERAL PROVISIONS

 

                14.1         Compliance with Applicable Laws and Regulations.  LICENSEE shall at all times comply with
applicable laws, regulations and orders in the countries of the Territory
relating to or in any way affecting this Agreement and LICENSEE’s performance
under this Agreement, including, without limitation, the export laws and
regulations of any country with jurisdiction over the Intellectual Property
Rights, Licensed Products, Development Tools and/or either party.  LICENSEE shall not market, distribute, or sell
the Game and/or Game Discs in any country in the Territory in which such
marketing, distribution or sale would violate any applicable laws, regulations
or orders of such country.

 

15

 

14.2         Force Majeure.  Neither party shall be liable for any breach
of this Agreement occasioned by any cause beyond the reasonable control of such
party, including governmental action, war, riot or civil commotion, fire,
natural disaster, labor disputes, restraints affecting shipping or credit,
delay of carriers, inadequate supply of suitable materials, or any other cause
which could not with reasonable diligence be controlled or prevented by the
parties.  In the event of material
shortages, including shortages of materials or production facilities necessary
for production of the Licensed Products, NINTENDO reserves the right to
allocate such resources among itself and its licensees.

 

14.3         Records and Audit.  During the Term and for a period of two (2) years
thereafter, LICENSEE agrees to keep accurate, complete and detailed records
relating to the use of the Confidential Information, the Development Tools and
the Intellectual Property Rights.  Upon
reasonable Notice to LICENSEE, NINTENDO may, at its expense, arrange for a
third-party audit of LICENSEE’s records, reports and other information related
to LICENSEE’s compliance with this Agreement; provided, however, that NINTENDO
shall not, during the course of the audit, access LICENSEE’s source code,
development plans, marketing plans, internal business plans or other items
deemed confidential by LICENSEE, except to the extent such materials
incorporate, disclose or reference NINTENDO’s Confidential Information or
Intellectual Property Rights.

 

14.4         Waiver, Severability, Integration,
and Amendment.  The failure of a
party to enforce any provision of this Agreement shall not be construed to be a
waiver of such provision or of the right of such party to thereafter enforce
such provision.  In the event that any
term, clause or provision of this Agreement shall be construed to be or
adjudged invalid, void or unenforceable, such term, clause or provision shall
be construed as severed from this Agreement, and the remaining terms, clauses
and provisions shall remain in effect. 
Together with the NDA, this Agreement constitutes the entire agreement
between the parties relating to the subject matter hereof.  All prior negotiations, representations,
agreements and understandings are merged into, extinguished by and completely
expressed by this Agreement and the NDA. 
Any amendment to this Agreement shall be in writing, signed by both
parties.

 

14.5         Survival.  In addition to those rights specified
elsewhere in this Agreement, the rights and obligations set forth in
Sections 3, 8, 9, 10, 11, 13.4, 13.7, 13.8 and 14 shall survive any
expiration or termination of this Agreement to the degree necessary to permit
their complete fulfillment or discharge.

 

14.6         Governing Law and Venue.  This Agreement shall be governed by the laws
of Japan, without regard to its conflict of laws principles.  Any legal actions (including judicial and
administrative proceedings) with respect to any matter arising under or growing
out of this Agreement, shall be brought in the Kyoto District Court.  Each party hereby consents to the
jurisdiction and venue of such court for such purposes.

 

14.7         Injunctive Relief.  LICENSEE acknowledges that in the event of
its breach of this Agreement, no adequate remedy at law may be available to NINTENDO
and that NINTENDO shall be entitled to seek injunctive or other similar
available relief in addition to any additional relief available to NINTENDO.

 

14.8         Attorneys’ Fees.  In the event it is necessary for either party
to this Agreement to undertake legal action to enforce or defend any action
arising out of or relating to this Agreement, the prevailing party in such
action shall be entitled to recover from the other party all reasonable
attorneys’ fees, costs and expenses relating to such legal action or any appeal
therefrom.

 

14.9         Expansion of Rights.  NINTENDO may expand the rights granted to
LICENSEE under this Agreement by providing written notice of such expansion of
rights to LICENSEE and without having to enter into a written addendum to the
present Agreement with LICENSEE.

 

16

 

14.10       Delegation of Duties.  NINTENDO, at its option, may delegate its
duties under the present Agreement to a wholly owned subsidiary.  To the extent necessary for the parties to
carry out their duties under this Agreement, NINTENDO shall provide notice to
LICENSEE of any such delegation, including to whom at NINTENDO’s wholly owned
subsidiary communications from LICENSEE under this Agreement may be
directed.  Also in the event of a
delegation by NINTENDO, the provisions of this Agreement shall continue to
govern the relationship between NINTENDO and LICENSEE and shall govern the
relationship between NINTENDO’s subsidiary and LICENSEE, subject to any
amendments or modifications to this Agreement which such subsidiary and
LICENSEE may agree to in their relationship. 
NINTENDO shall remain obligated under the present Agreement for the
performance of NINTENDO’s duties by NINTENDO’s subsidiary.

 

14.11       Counterparts and Signature by Facsimile.  This Agreement may be signed in counterparts,
which shall together constitute a complete Agreement.  A signature transmitted by facsimile or
electronically via computer network shall be considered an original for
purposes of this Agreement.

 

IN WITNESS WHEREOF, the
parties have entered into this Agreement on the dates set forth below.

 

	
  NCL:

  	
   

  	
  LICENSEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Nintendo Co., Ltd.

  	
   

  	
  Activision, Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
          /s/
  Satoru Iwata

  	
   

  	
  By:

  	
          /s/
  George Rose

  	
   

  
	
   

  	
   

  	
   

  	
   George Rose

  
	
   

  	
  President

  	
   

  	
   

  	
   General Counsel

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  Dec. – 3.2007

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
       19
  November 2007

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Activision
  Publishing, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
          /s/
  George Rose

  
	
   

  	
   

  	
   

  	
   George Rose

  
	
   

  	
   

  	
   

  	
   Title:

  	
  Chief Legal Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  19 November 2007

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Activision UK, Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
          /s/
  George Rose

  
	
   

  	
   

  	
   

  	
   George Rose

  
	
   

  	
   

  	
   

  	
   Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  19 November 2007

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATVI France, S.A.S.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
          /s/
  George Rose

  
	
   

  	
   

  	
   

  	
   George
  Rose

  
	
   

  	
   

  	
   

  	
   Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
       19
  November 2007

  
											

 

17

 

	
   

  	
   

  	
  Activision GmbH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
          /s/
  George Rose

  
	
   

  	
   

  	
   

  	
   George Rose

  
	
   

  	
   

  	
   

  	
   Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  19 November 2007

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Activision Pty, Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
          /s/
  George Rose

  
	
   

  	
   

  	
   

  	
   George Rose

  
	
   

  	
   

  	
   

  	
   Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  19 November 2007

  	
   

  
						

 

Enclosure:

 

Annex A:  Guidelines on
Ethical Conduct

 

18

 

Annex A

 

Guidelines on Ethical Content

 

The following Guidelines on Ethical Content are presented for assistance
in the development of Games by defining the types of the theme inconsistent
with NINTENDO’s corporate philosophy. 
Exceptions may be made when necessary to maintain the integrity of the
Game or the Game’s theme.  Games shall
not:

 

(a)                      contain sexually explicit
content including but not limited to nudity, rape, sexual intercourse and
sexual touching; for instance, NINTENDO does not allow bare-breasted women in
Games, however, mild displays of affection such as kissing or hugging are
acceptable;

 

(b)                     contain language or depictions
which specifically denigrate members of any race, gender, ethnicity, religion
or political group;

 

(c)                      depict gratuitous or
excessive blood or violence.  NINTENDO
does not permit depictions of animal cruelty or torture;

 

(d)                     depict verbal or physical spousal
or child abuse;

 

(e)                      permit racial, gender,
ethnic, religious or political stereotypes; for example, religious symbols such
as crosses will be acceptable when fitting into the theme of the Game and not
promoting a specific religious denomination;

 

(f)                        use profanity, obscenity or
incorporate language or gestures that are offensive by prevailing public
standards and tastes; and

 

(g)                     promote the use of illegal
drugs, smoking materials, tobacco and/or alcohol; for example NINTENDO does not
allow gratuitous beer or cigarette advertisement anywhere in a Game; however,
Sherlock Holmes smoking a pipe would be acceptable as it fits the theme of the
Game.

 

JEN:hjd

 

19

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