Document:

Exhibit 4.1

 

Execution
Version

 

 

 

 

 

 

 

SUPPLEMENTAL
INDENTURE NO. 12

 

by
and between

 

HOSPITALITY
PROPERTIES TRUST

 

and

 

U.S.
BANK NATIONAL ASSOCIATION,

as
Trustee

 

 

 

 

as
of September 28, 2007

 

 

 

SUPPLEMENTAL
TO THE INDENTURE DATED AS OF FEBRUARY 25, 1998

 

 

 

________________________

 

 

HOSPITALITY
PROPERTIES TRUST

 

6.70%
Senior Notes due 2018

 

________________________

 

 

 

 

 

 

 

 

 

This
SUPPLEMENTAL INDENTURE NO. 12 (this “Supplemental
Indenture”) made and entered into as of September 28, 2007
between HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust
(the “Company”), and U.S. BANK
NATIONAL ASSOCIATION, a national banking association, as Trustee (the “Trustee”).

WITNESSETH
THAT:

 

WHEREAS,
the Company and the Trustee are parties to an Indenture, dated as of February
25, 1998 (the “Indenture”),
relating to the Company’s issuance, from time to time, of various series of
debt securities;

WHEREAS,
the Company has determined to issue debt securities known as its 6.70% Senior
Notes due 2018; and

WHEREAS,
the Indenture provides that certain terms and conditions for each series of
debt securities issued by the Company thereunder may be set forth in an
indenture supplemental to the Indenture;

NOW,
THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

ARTICLE 1

DEFINED TERMS

Section 1.1             Terms
Defined in Indenture.  Capitalized
terms used herein and not defined herein have the meanings ascribed to such
terms in the Indenture.

Section 1.2             Supplemental
Definitions.  The following
definitions supplement, and, to the extent inconsistent with, replace the
definitions in Section 101 of the Indenture:

“Acquired Debt” means Debt of a Person (i)
existing at the time such Person becomes a Subsidiary or (ii) assumed in
connection with the acquisition of assets from such Person, in each case, other
than Debt incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition. 
Acquired Debt shall be deemed to be incurred on the date of the related acquisition
of assets from any Person or the date the acquired Person becomes a Subsidiary.

“Additional Notes” has the meaning provided
in Section 2.1(b) hereof.

“Adjusted Total Assets” has the meaning
provided in clause (i) of Section 3.1(a) hereof.

“Annual Debt Service” as of any date means
the maximum amount which is expensed in any 12-month period for interest on
Debt of the Company and its Subsidiaries.

“Business Day” means any day other than a
Saturday or Sunday or a day on which banking institutions in The City of New
York or in the city in which the Corporate Trust Office of the Trustee is
located are required or authorized to close.

 

 

“Capital Stock” means, with respect to any
Person, any capital stock (including preferred stock), shares, interests,
participation or other ownership interests (however designated) of such Person
and any rights (other than debt securities convertible into or exchangeable for
capital stock), warrants or options to purchase any thereof.

“Consolidated Income Available for Debt Service”
for any period means Earnings from Operations of the Company and its
Subsidiaries plus amounts which have been deducted, and minus amounts which
have been added, for the following (without duplication): (i) interest on Debt
of the Company and its Subsidiaries, (ii) cash reserves made by lessees as
required by the Company’s leases for periodic replacement and refurbishment of
the Company’s assets, (iii) provision for taxes of the Company and its
Subsidiaries based on income, (iv) amortization of debt discount and deferred
financing costs, (v) provisions for gains and losses on properties and property
depreciation and amortization, (vi) the effect of any noncash charge resulting
from a change in accounting principles in determining Earnings from Operations
for such period and (vii) amortization of deferred charges.

“Corporate Trust Office” means One Federal
Street, 3rd  Floor, Boston, Massachusetts 02110, or such other
address as may be designated from time to time by the Trustee by providing
written notice to the Company.

“Debt” of the Company or any Subsidiary
means, without duplication, any indebtedness of the Company or any Subsidiary,
whether or not contingent, in respect of (i) borrowed money or evidenced by
bonds, notes, debentures or similar instruments, (ii) indebtedness for borrowed
money secured by any Encumbrance existing on property owned by the Company or
any Subsidiary, to the extent of the lesser of (x) the amount of indebtedness
so secured and (y) the fair market value of the property subject to such
Encumbrance, (iii) the reimbursement obligations, contingent or otherwise, in
connection with any letters of credit actually issued (other than letters of
credit issued to provide credit enhancement or support with respect to other
indebtedness of the Company or any Subsidiary otherwise reflected as Debt
hereunder) or amounts representing the balance deferred and unpaid of the
purchase price of any property or services, except any such balance that
constitutes an accrued expense or trade payable, or all conditional sale obligations
or obligations under any title retention agreement, (iv) the principal amount
of all obligations of the Company or any Subsidiary with respect to redemption,
repayment or other repurchase of any Disqualified Stock, or (v) any lease of
property by the Company or any Subsidiary as lessee which is reflected on the
Company’s consolidated balance sheet as a capitalized lease in accordance with
GAAP, to the extent, in the case of items of indebtedness under (i) through
(iii) above, that any such items (other than letters of credit) would appear as
a liability on the Company’s consolidated balance sheet in accordance with
GAAP, and also includes, to the extent not otherwise included, any obligation
by the Company or any Subsidiary to be liable for, or to pay, as obligor,
guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), Debt of another Person (other than the Company or any
Subsidiary) (it being understood that Debt shall be deemed to be incurred by
the Company or any Subsidiary whenever the Company or such Subsidiary shall
create, assume, guarantee or otherwise become liable in respect thereof).

“Depositary” has the meaning provided in
Section 2.1(d) hereof.

 

2

“Disqualified Stock” means, with respect to
any Person, any Capital Stock of such Person which by the terms of such Capital
Stock (or by the terms of any security into which it is convertible or for
which it is exchangeable or exercisable), upon the happening of any event or
otherwise (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise (other than Capital Stock which is redeemable solely in
exchange for common stock or shares), (ii) is convertible into or exchangeable
or exercisable for Debt or Disqualified Stock, or (iii) is redeemable at the
option of the Holder thereof, in whole or in part (other than Capital Stock
which is redeemable solely in exchange for common stock or shares), in each
case on or prior to the stated maturity of the Notes.

“Earnings from Operations” for any period
means net earnings excluding gains and losses on sales of investments,
extraordinary items, gains and losses from early extinguishment of debt and
property valuation losses, as reflected in the financial statements of the
Company and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.

“Encumbrance” means any mortgage, lien,
charge, pledge or security interest of any kind.

“Interest Payment Date” has the meaning
provided in Section 2.1(e) hereof.

“Make-Whole Amount” means, in connection with any optional redemption or accelerated payment
of any Notes prior to July 15, 2017, the excess, if any, of (i) the
aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had been made on July 15, 2017,
determined by discounting, on a semiannual basis, such principal and interest
at the Reinvestment Rate (determined on the third Business Day preceding the
date such notice of redemption is given or declaration of acceleration is made)
from the respective dates on which such principal and interest would have been
payable if such redemption or accelerated payment had been made on
July 15, 2017, over (ii) the aggregate principal amount of the Notes being
redeemed or paid.  In the case of any
redemption or accelerated payment of notes on or after July 15, 2017, the
Make-Whole Amount means zero. For purposes of this Supplemental
Indenture and the Notes, references in the Indenture to the payment of the
principal (and premium, if any) and interest on the Notes shall be deemed to
include the payment of the Make-Whole Amount, if any, due upon redemption with
respect to the Notes.  The Make-Whole
Amount shall be calculated by the Company and set forth in an Officer’s
Certificate delivered to the Trustee, and the Trustee shall be entitled to rely
on said Officer’s Certificate.

“Notes” means the Company’s 6.70% Senior
Notes due 2018, issued under this Supplemental Indenture and the Indenture, as
amended or supplemented from time to time. 
(For the avoidance of doubt, the term “Notes” shall include any
Additional Notes so issued.)

“Regular Record Date” has the meaning
provided in Section 2.1(e) hereof.

“Reinvestment Rate” means a rate per annum
equal to the sum of 0.35% (thirty-five hundredths of one percent) plus the
yield on treasury securities at constant maturity under the 

3

heading “Week Ending” published in the Statistical Release under the
caption “Treasury Constant Maturities” for the maturity (rounded to the nearest
month) corresponding to the remaining life to maturity (which, in the case of
maturities corresponding to the principal and interest due on the notes at
their maturity, shall be deemed to be July 15, 2017), as of the payment
date of the principal being redeemed or paid. 
If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the Reinvestment
Rate shall be interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month.  For purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.

“Secured Debt” means Debt secured by any
mortgage, lien, charge, pledge or security interest of any kind.

“Statistical Release” means the statistical
release designated “H.15(519)” or any successor publication which is published
weekly by the Federal Reserve System and which establishes yields on actively
traded United States government securities adjusted to constant maturities or,
if such statistical release is not published at the time of any determination
under this Supplemental Indenture, then any publicly available source of
similar market data which shall be designated by the Company.

“Subsidiary” means any corporation or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests of which are owned,
directly or indirectly, by the Company or one or more other Subsidiaries of the
Company.  For the purposes of this
definition, “voting equity securities” means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.

“Total Assets” as of any date means the sum
of (i) the Undepreciated Real Estate Assets and (ii) all other assets of the
Company and its Subsidiaries determined in accordance with GAAP (but excluding
accounts receivable and intangibles).

“Total Unencumbered Assets” means the sum
of (i) those Undepreciated Real Estate Assets not subject to an Encumbrance for
borrowed money and (ii) all other assets of the Company and its Subsidiaries
not subject to an Encumbrance for borrowed money determined in accordance with
GAAP (but excluding accounts receivable and intangibles).

“Undepreciated Real Estate Assets” as of
any date means the cost (original cost plus capital improvements) of, real
estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization determined on a consolidated basis in accordance
with GAAP.

“Unsecured Debt” means Debt which is not
secured by any of the properties of the Company or any Subsidiary.

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ARTICLE 2

TERMS OF THE NOTES

Section 2.1             Terms of
the Notes.  Pursuant to
Section 301 of the Indenture, the Notes shall have the following terms and
conditions:

(a)           Title.  The Notes shall be Registered Securities
under the Indenture and shall be known as the Company’s “6.70% Senior Notes due
2018.”

(b)           Aggregate Principal
Amount.  The aggregate principal
amount of Notes to be authenticated and delivered under this Supplemental Indenture
shall initially be limited to $350,000,000, except as otherwise permitted by
the provisions of the Indenture; provided that the Company may from time to time,
without the consent of the Holders of the Notes, increase the principal amount
of the Notes by issuing additional Securities in the future (the “Additional Notes”)
having the same terms and ranking equally and ratably with the Notes in all
respects and with the same CUSIP number as the Notes, except for the difference
in the issue price and interest accrued prior to the issue date of such
Additional Notes, provided that such Additional Notes constitute part of the
same issue as the Notes for U.S. federal income tax purposes.  Any Additional Notes will be treated as a
single series with the Notes under the Indenture and shall have the same terms
as to status, redemption and otherwise as the Notes, and references herein to
the Notes shall include any Additional Notes.

(c)           Form of Notes.  The Notes (together with the Trustee’s
certificate of authentication) shall be substantially in the form of
Exhibit A hereto, which is hereby incorporated in and made a part of this
Supplemental Indenture.  Any of the Notes may have such letters,
numbers or other marks of identification and such notations, legends, endorsements
or changes as the officers executing the same may approve (execution  thereof to be conclusive evidence of such
approval) and as are not inconsistent with the provisions of the Indenture, or
as may be required by the Depositary or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any securities exchange or automated quotation system on
which the Notes may be listed, or to conform to usage, or to indicate any
special limitations or restrictions to which any particular Notes are subject.

(d)           Registered
Securities in Book Entry Form.   The
Notes shall be issuable in the form of one or more global Securities registered
in the name of The Depository Trust Company’s nominee, and shall be deposited
with, or on behalf of, The Depository Trust Company, New York, New York
(including any successor depositary appointed hereunder, the “Depositary”).  The Notes may be surrendered for registration
of transfer at the office or agency of the Company (including the Corporate
Trust Office of the Trustee) maintained for such purpose, or at any other
office or agency maintained by the Company for such purpose.

So long as the Depositary or its nominee is the registered owner of a Global
Note, the Depositary or its nominee, as the case may be, will be considered the
sole Holder of the Notes represented by such Global Note for all purposes under
the Indenture and this Supplemental Indenture, and the beneficial owners of the
Notes will be entitled only to those 

5

rights and benefits afforded to them in accordance with the Depositary’s
regular operating procedures.  Except as
provided below, owners of beneficial interests in a Global Note will not be
entitled to have Notes registered in their names, will not receive or be
entitled to receive physical delivery of Notes in certificated form and will
not be considered the registered owners or Holders thereof under the Indenture
or this Supplemental Indenture.

If (i) the Depositary is at any time unwilling or unable to continue as
depository or if at any time the Depositary ceases to be a clearing agency
registered under the Exchange Act and a successor depository is not appointed
by the Company within 90 days, (ii) an Event of Default relating to the Notes
has occurred and is continuing and the beneficial owners representing a
majority in principal amount of the Notes advise the Depository to cease acting
as depository for the Notes, or (iii) the Company, in its sole discretion,
determines at any time that the Notes shall no longer be represented by a
Global Note, the Company will in accordance with the Indenture issue individual
Notes in certificated form of the same series and like tenor and in the
applicable principal amount in exchange for the Notes represented by the Global
Note.  In any such instance, an owner of
a beneficial interest in a Global Note will be entitled to physical delivery of
individual Notes in certificated form of the same series and like tenor, equal
in principal amount to such beneficial interest and to have the Notes in
certificated form registered in its name. 
Notes so issued in certificated form will be issued in denominations of
$1,000 or any integral multiple thereof and will be issued in registered form
only, without coupons.

(e)           Interest and
Interest Rate.  The Notes will bear
interest at a rate of 6.70% per annum, from September 28, 2007 (or, in the
case of Additional Notes, as provided in Section 2.1(b) above) or from the
immediately preceding Interest Payment Date to which interest has been paid or
duly provided for, payable semi-annually in arrears on January 15 and
July 15 of each year, commencing January 15, 2008, or if such day is
not a Business Day, on the next succeeding Business Day (each of which shall be
an “Interest Payment Date”), to
the Persons in whose names the Notes are registered in the Security Register at
the close of business on the day falling 14 calendar days immediately preceding
the applicable Interest Payment Date (whether or not a Business Day), as the
case may be (each, a “Regular Record Date”).

(f)            Principal
Repayment; Currency.  The stated
maturity of the Notes is January 15, 2018; provided, however, the Notes
may be earlier redeemed at the option of the Company as provided in paragraph
(g) below.  The principal of each Note
payable on its maturity date shall be paid against presentation and surrender
thereof at the Corporate Trust Office of the Trustee, in such coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public or private debts. 
The Company will not pay Additional Amounts (as defined in the
Indenture) on the Notes.

(g)           Redemption at the Option of the Company. The Notes will be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days’ notice to each Holder of Notes to be redeemed at its address appearing in
the Security Register, at a price equal to the sum of (i) the principal amount
of the Notes being redeemed, plus accrued and unpaid interest to but excluding
the applicable Redemption Date, plus (ii) the Make-Whole Amount, if any (it
being understood that if the notes are redeemed on or after July 15, 2017,
the Make-Whole Amount equals zero).

6

(h)           Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Company shall be directed to it at 400 Centre Street, Newton, Massachusetts
02458, Attention:  President; notices to
the Trustee shall be directed to it at One Federal Street, 3rd Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, Re: Hospitality
Properties Trust 6.70% Senior Notes due 2018, or as to either party, at such
other address as shall be designated by such party in a written notice to the
other party.

(i)            Global Note Legend.  Each Global Note shall bear the following
legend on the face thereto and any other appropriate legends specified in an
Officers’ Certificate:

UNLESS THIS NOTE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN
PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE
OF SUCH SUCCESSOR.

 

ARTICLE 3

ADDITIONAL COVENANTS

Section 3.1             Additional
Covenants of the Company.  In
addition to the covenants of the Company set forth in Article Ten of the
Indenture, for the benefit of the Holders of the Notes:

(a)           Limitations
on Incurrence of Debt.

(i)            The Company will not,
and will not permit any Subsidiary to, incur any Debt if, immediately after
giving effect to the incurrence of such additional Debt and the application of
the proceeds thereof, the aggregate principal amount of all outstanding Debt of
the Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP is greater than 60% of the sum (“Adjusted Total Assets”) of (without
duplication) (A) the Total Assets of the Company and its Subsidiaries as of the
end of the calendar quarter covered in the Company’s Annual Report on Form
10-K, or 

 

7

the
Quarterly Report on Form 10-Q, as the case may be, most recently filed with the
Securities and Exchange Commission (or, if such filing is not permitted under
the Securities Exchange Act of 1934, as amended, with the Trustee) prior to the
incurrence of such additional Debt and (B) the purchase price of any real
estate assets or mortgages receivable acquired, and the amount of any
securities offering proceeds received (to the extent that such proceeds were not
used to acquire real estate assets or mortgages receivable or used to reduce
Debt), by the Company or any Subsidiary since the end of such calendar quarter,
including those proceeds obtained in connection with the incurrence of such
additional Debt.

(ii)           In addition to the
foregoing limitation on the incurrence of Debt, the Company will not, and will
not permit any Subsidiary to, incur any Secured Debt if, immediately after
giving effect to the incurrence of such additional Secured Debt and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Secured Debt of the Company and its Subsidiaries on a consolidated
basis is greater than 40% of Adjusted Total Assets.

(iii)          In addition to the
foregoing limitations on the incurrence of Debt, the Company will not, and will
not permit any Subsidiary to, incur any Debt if the ratio of Consolidated
Income Available for Debt Service to the Annual Debt Service for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Debt is to be incurred shall have been less than 1.5 to 1.0, on a
pro forma basis after giving effect thereto and to the application of the
proceeds therefrom, and calculated on the assumption that (A) such Debt and any
other Debt incurred by the Company and its Subsidiaries since the first day of
such four-quarter period and the application of the proceeds therefrom,
including to refinance other Debt, had occurred at the beginning of such
period; (B) the repayment or retirement of any other Debt by the Company and
its Subsidiaries since the first date of such four-quarter period had been
repaid or retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility shall be
computed based upon the average daily balance of such Debt during such period);
(C) in the case of Acquired Debt or Debt incurred in connection with any
acquisition since the first day of such four-quarter period, the related
acquisition had occurred as of the first day of such period with appropriate
adjustments with respect to such acquisition being included in such pro forma
calculation; and (D) in the case of any acquisition or disposition by the
Company or its Subsidiaries of any asset or group of assets since the first day
of such four-quarter period, whether by merger, stock purchase or sale, or
asset purchase or sale, such acquisition or disposition or any related
repayment of Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation. If the Debt giving rise to the need to make the
foregoing calculation or any other Debt incurred after the first day of the
relevant four-quarter period bears interest at a floating rate then, for
purposes of calculating the Annual Debt Service, the interest rate on such Debt
shall be computed on a pro forma basis as if the average interest rate which
would have been in effect during the entire such four-quarter period had been
the applicable rate for the entire such period.

8

(b)           Maintenance of
Total Unencumbered Assets.  The
Company and its Subsidiaries will maintain at all times Total Unencumbered
Assets of not less than 150% of the aggregate outstanding principal amount of
the Unsecured Debt of the Company and its Subsidiaries on a consolidated basis.

ARTICLE 4

OTHER PROVISIONS

Section 4.1             Additional
Event of Default.  For purposes of
this Supplemental Indenture and the Notes, in addition to the Events of Default
set forth in Section 501 of the Indenture, it shall also constitute an “Event
of Default” if a default under any bond, debenture, note or other evidence of
indebtedness of the Company (including a default with respect to any other
series of securities), or under any mortgage, indenture or other instrument of
the Company under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company (or by any
Subsidiary, the repayment of which the Company has guaranteed or for which the
Company is directly responsible or liable as obligor or guarantor) having an
aggregate principal amount outstanding of at least $20,000,000, whether such
indebtedness now exists or shall hereafter be incurred or created, which
default shall have resulted in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged or such acceleration
having been rescinded or annulled within a period of ten days after there shall
have been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in principal
amount of the outstanding Notes, a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a “Notice
of Default” hereunder.

Section 4.2             Make-Whole
Amount Upon Acceleration. 
Notwithstanding any provisions to the contrary in the Indenture, upon
any acceleration of the Notes under Section 502 of the Indenture, the
amount immediately due and payable in respect of the Notes shall equal the
Outstanding principal amount thereof, plus accrued and unpaid interest thereon,
plus, if such acceleration occurs prior to July 15, 2017, the Make-Whole
Amount.

Section
4.3             Applicability of
Discharge, Defeasance and Covenant Defeasance Provisions.  The Discharge, Defeasance and Covenant
Defeasance provisions in Article Fourteen of the Indenture will apply to the
Notes.

 

ARTICLE 5

EFFECTIVENESS

This
Supplemental Indenture shall be effective for all purposes as of the date and
time this Supplemental Indenture has been executed and delivered by the Company
and the Trustee in accordance with Article Nine of the Indenture.  As supplemented hereby, the Indenture is
hereby confirmed as being in full force and effect.

 

9

ARTICLE 6

MISCELLANEOUS

Section 6.1             Separability.  In the event any provision of this
Supplemental Indenture shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof or any provision of the Indenture.

Section 6.2             Construction
of Terms.  To the extent that any
terms of this Supplemental Indenture or the Notes are inconsistent with the
terms of the Indenture, the terms of this Supplemental Indenture or the Notes
shall govern and supersede such inconsistent terms.

Section 6.3             Effect of Headings. The Section headings herein
are for convenience only and shall not affect the construction hereof.

Section 6.4             Governing
Law.  This Supplemental Indenture
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts.

Section 6.5             Counterparts.  This Supplemental Indenture may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.

[Signature Page Follows]

 

10

IN
WITNESS WHEREOF, the Company and the Trustee have caused this Supplemental
Indenture to be executed as an instrument under seal in their respective
corporate names as of the date first above written.

HOSPITALITY
PROPERTIES TRUST

 

 

	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
  Name:

  	
   John G. Murray

  	
   

  
	
  Title:

  	
  President and Chief Operating
  Officer

  	
   

  

 

U.S.
BANK NATIONAL ASSOCIATION, as

Trustee

 

 

	
  By:

  	
  /s/ James P. Freeman

  	
   

  
	
  Name:

  	
  James P. Freeman

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  

 

 

 

[Signature Page to Supplemental Indenture No. 12]

EXHIBIT
A

 

 

 

[Face
of Note]

 

 

 

[Include
only for Global Notes]

 

[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

 

UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES
IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC
TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC
OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH
SUCCESSOR.]

 

 

 

6.70%
Senior Note due 2018

 

No.                                                                                                                                                                          $                              

 

HOSPITALITY
PROPERTIES TRUST

 

promises to pay to                                        
or registered assigns, the
principal sum of                       
($       ) on January 15, 2018, subject to the terms set forth on the
reverse of this Note and the terms of the Indenture referred to therein.

 

Interest Payment Dates:  Each January 15 and July 15 (or if
such day is not a Business Day, the next succeeding Business Day), commencing
January 15, 2008.

 

A-1

 

Record
Dates:  The day falling 14 calendar days
prior to any Interest Payment Date.

 

[CUSIP
No:                                      ]

[ISIN
No:                                       ]

 

HOSPITALITY PROPERTIES TRUST

 

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

CERTIFICATE OF AUTHENTICATION

 

Dated:

 

This is one of the Notes referred to in the
within-mentioned Indenture:

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  

 

A-2

[THE
FOLLOWING CONSTITUTES THE REVERSE OF THE SECURITY]

 

 

HOSPITALITY
PROPERTIES TRUST

 

6.70%
Senior Note due 2018

 

Capitalized
terms used herein have the meanings assigned to them in the Indenture (as
defined below) unless otherwise indicated.

1.             Interest.  Hospitality Properties Trust, a Maryland real
estate investment trust (the “Company”),
promises to pay interest on the principal amount of this Note at the rate and
in the manner specified below.

The
Company shall pay in cash interest on the principal amount of this Note at the
rate per annum of 6.70%.  The Company
will pay interest semi-annually in arrears on January 15 and July 15
of each year, beginning on January 15, 2008, or if any such day is not a
Business Day (as defined in the Indenture), on the next succeeding Business Day
(each an “Interest Payment Date”),
to Holders of record on the day falling 14 calendar days immediately preceding
such Interest Payment Date (whether or not a Business Day).

Interest
will be computed on the basis of a 360-day year consisting of twelve 30-day
months.  Interest shall accrue from the
most recent date to which interest on the Notes has been paid or, if no
interest has been paid, from September 28, 2007.

2.             Method of Payment.  The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date.  The Company
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts.  The Company, however, may pay principal,
premium, if any, and interest by check payable in such money.  It may mail an interest check to a Holder’s
registered address.

3.             Indenture.  The Company issued the Notes under an
Indenture dated as of February 25, 1998 and Supplemental Indenture
No. 12 dated as of September 28, 2007 (collectively, the “Indenture”)
between the Company and the Trustee.  The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as in effect on
the date of the Indenture and Holders of the Notes are referred to the
Indenture and such Act for a statement of such terms.  The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes.  The Notes are senior unsecured general
obligations of the Company initially issued in an aggregate principal amount of
$350,000,000.

4.             Optional Redemption.  The Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days’ notice, at a redemption price equal to the sum of (i)
the principal amount of the Notes being redeemed, 

A-3

plus accrued and unpaid interest
to but excluding the applicable Redemption Date and (ii) the Make-Whole Amount,
if any.

As used herein the term “Make-Whole
Amount” means, in connection with any optional redemption or accelerated
payment of any Notes prior to July 15, 2017, the excess, if any, of (i)
the aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had been made on July 15, 2017,
determined by discounting, on a semiannual basis, such principal and interest
at the Reinvestment Rate (determined on the third Business Day preceding the
date such notice of redemption is given or declaration of acceleration is made)
from the respective dates on which such principal and interest would have been
payable if such redemption or accelerated payment had been made on
July 15, 2017, over (ii) the aggregate principal amount of the Notes being
redeemed or paid.  In the case of any
redemption or accelerated payment of notes on or after July 15, 2017, the
Make-Whole Amount means zero.  For purposes
of the Indenture and the Notes, references in the Indenture to the payment of
the principal (and premium, if any) and interest on the Notes shall be deemed
to include the payment of the Make-Whole Amount, if any, due upon redemption
with respect to the Notes.  The
Make-Whole Amount shall be calculated by the Company and set forth in an
Officer’s Certificate delivered to the Trustee, and the Trustee shall be
entitled to rely on said Officer’s Certificate.

As
used herein the term “Reinvestment Rate” means a rate per annum equal to the
sum of 0.35% (thirty-five hundredths of one percent) plus the yield on treasury
securities at constant maturity under the heading “Week Ending” published in
the Statistical Release (as defined herein) under the caption “Treasury
Constant Maturities” for the maturity (rounded to the nearest month) corresponding
to the remaining life to maturity (which, in the case of maturities
corresponding to the principal and interest due on the Notes at their maturity,
shall be deemed to be
July 15, 2017), as of the payment date
of the principal being redeemed or paid. 
If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the Reinvestment
Rate shall be interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month.  For purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.

As
used herein the term “Statistical Release” means the statistical release
designated “H.15(519)” or any successor publication which is published weekly
by the Federal Reserve System and which establishes yields on actively traded
United States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination under the
Indenture, then any publicly available source of similar market data which
shall be designated by the Company.

5.             Mandatory Redemption.  The Company shall not be required to make
sinking fund or redemption payments with respect to the Notes.

 

A-4

6.             Notice of Redemption.  Notice of redemption shall be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at its registered address. 
Notes may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed.  On and after the Redemption Date, interest
ceases to accrue on Notes or portions of them called for redemption.

7.             Denominations, Transfer,
Exchange.  The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. 
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture.  The Security
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. 
The Security Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption.  Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before the mailing of a notice of
redemption of Notes, or during the period between a record date and the
corresponding Interest Payment Date.

8.             Defaults and Remedies.  In case an Event of Default (as defined in
the Indenture) with respect to the Notes shall have occurred and be continuing,
the principal hereof may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the provisions
provided in the Indenture.

9.             Actions of Holders.  The Indenture contains provisions permitting
the Holders of not less than a majority of the aggregate principal amount of
the outstanding Notes, subject to certain exceptions as provided in the Indenture,
on behalf of the Holders of all such Notes at a meeting duly called and held as
provided in the Indenture, to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
the Indenture to be made, given or taken by the Holders of the Notes, including
without limitation, waiving (a) compliance by the Company with certain
provisions of the Indenture, and (b) certain past defaults under the Indenture
and their consequences.  Any resolution
passed or decision taken at any meeting of the Holders of the Notes in
accordance with the provisions of the Indenture shall be conclusive and binding
upon such Holders and upon all future Holders of this Note and other Notes
issued upon the registration of transfer hereof or in exchange heretofore or in
lieu hereof.

10.           Persons Deemed Owners.  The Company, the Trustee, and any agent of
the Company or the Trustee may deem and treat the Person in whose name this
Note is registered on the Security Register as its absolute owner for all
purposes.

11.           Authentication.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

12.           Governing Law.  THE INTERNAL LAW OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.

13.           No Personal Liability.  THE DECLARATION OF TRUST OF THE COMPANY,
AMENDED AND RESTATED ON AUGUST 21, 1995, A COPY OF WHICH, TOGETHER 

 

A-5

WITH ALL AMENDMENTS AND
SUPPLEMENTS THERETO (THE “DECLARATION”), IS DULY FILED IN THE OFFICE OF THE
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE
NAME “HOSPITALITY PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE
DECLARATION OF TRUST, AS SO AMENDED AND SUPPLEMENTED, COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE
COMPANY.  ALL PERSONS DEALING WITH THE
COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

The
Company will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Requests may be
made to:

	
  Hospitality Properties Trust

  
	
  400
  Centre Street

  
	
  Newton,
  MA 02458

  
	
  Telecopier
  No.: (617) 964-8389

  
	
  Attention:
  President

  

 

 

or such other address as the Company may specify pursuant to the Indenture.

 

A-6

ASSIGNMENT
FORM

 

To
assign this Note, fill in the form below:

 

[I] [We] assign and transfer this
Note to                                                                                                       

                                                                                  [Print or
type assignee’s name, address and zip code]

                                                                     
       [Insert assignee’s soc. sec.
or tax I.D. no.] and irrevocably appoint                                                                                                                  
to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

Date:                                

 

	
  Signature Guaranteed

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NOTICE: Signature must be guaranteed by an eligible
  Guarantor Institution (banks, stockbrokers, savings and loan associations and
  credit unions) with membership in an approved signature guarantee medallion
  program pursuant to Securities and Exchange Commission Rule 17Ad-15.

  	
   

  	
  NOTICE: The signature to this Assignment must
  correspond with the name as written upon the face of the within Note in every
  particular, without alteration or enlargement or any change whatever.

  	
   

  

 

 

 

 

 

 

A-7Exhibit 10.1

CONFIDENTIAL LICENSE AGREEMENT

FOR NINTENDO DS (Western Hemisphere)

THIS LICENSE AGREEMENT (“Agreement”)
is entered into between NINTENDO OF AMERICA, INC. (“NOA”), at 4820 150th
Avenue N.E., Redmond, WA 98052 Attn: General Counsel (Fax: 425-882-3585) and
Activision Publishing, Inc. (“LICENSEE”) at 3100 Ocean Park Blvd, Santa Monica,
CA 90405 Attn: General Counsel (Fax: (310) 255-2152).  NOA and LICENSEE agree as follows:

1.             RECITALS

1.1           NOA markets and sells advanced
design, high-quality video game systems, including the Nintendo DS system.

1.2           LICENSEE desires a license to use
highly proprietary programming specifications, development tools, trademarks
and other valuable intellectual property rights of NOA and its parent company,
Nintendo Co., Ltd. (collectively “Nintendo”), to develop, have manufactured,
advertise, market and sell video game software for play on the Nintendo DS
system.

1.3           NOA is willing to grant a license to
LICENSEE on the terms and conditions set forth in this Agreement.

2.             DEFINITIONS

2.1           “Artwork” means the design
specifications for the Game Card label and Printed Materials in the format
specified by NOA in the Guidelines.

2.2           “Bulk Goods” means the Game Cards
with Game Card labels affixed.

2.3           “Development Tools” means the
development kits, programming tools, emulators and other materials that may be
used in the development of Games under this Agreement.

2.4           “Effective Date” means October 11,
2004.

2.5           “Finished Product(s)” means the fully assembled and
shrink-wrapped Licensed Products, each including a Game Card,
Game Card label and Printed Materials.

2.6           “Game Card(s)” means custom card media specifically
manufactured under the terms of this Agreement for play on the Nintendo DS
system, incorporating semiconductor components in which a Game has been
stored.

2.7           “Game(s)” means the Nintendo DS version of an
interactive video game program, or other applications approved by Nintendo
(including source and object/binary code) developed  for the Nintendo DS system.

 

 

2.8           “Guidelines” means the current
version or any future revision of the “Nintendo DS Packaging Guidelines”, “Nintendo
DS Development Manual” and related guidelines provided by NOA.

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

2.10         “Intellectual Property Rights” means individually,
collectively or in any combination, Proprietary Rights owned, licensed or
otherwise held by Nintendo that are associated with the development,
manufacturing, advertising, marketing or sale of the Licensed Products,
including, without limitation, (a) registered and unregistered trademarks and
trademark applications used in connection with Games for the Nintendo DS system
including “Nintendo®”, “Nintendo DSTM”, “ DSTM” and the “Official Nintendo Seal®”,
(b) select trade dress associated with the Nintendo DS system and licensed
Games for play thereon, (c) Proprietary Rights in the Security Technology
incorporated into the Game Cards, (d) rights in the Development Tools for use
in developing the Games, (e) patents or design registrations Nintendo in the
Confidential Information.

2.11         “Licensed Products” means (a) Finished Products, or
(b) Bulk Goods when fully assembled and shrink-wrapped with the Printed
Materials.

2.12         “Marketing Materials” means marketing, advertising or
promotional materials developed by or for LICENSEE (or subject to LICENSEE’S
approval) to promote the sale of the Licensed Products, including, but
not limited to, television, radio and on-line, advertising, point-of-sale
materials (e.g. posters, counter-cards), package advertising and print media or
materials.

2.13         “NDA” means the non-disclosure
agreement providing for the protection of Confidential Information related to
the Nintendo DS system previously entered into between NOA and LICENSEE.

2.14         “Notice” means any notice permitted or required under
this Agreement.  All notices shall be
sufficiently given when served or delivered, (b) transmitted by faL,bimile,
with an original sent concurrently by first class U.S. mail, or (c)
deposited, postage prepaid, with a guaranteed air courier service, in each case
addressed as stated herein, or addressed to such other person or address either
party may designate in a Notice.  Notice
shall be deemed effective upon the earlier of actual receipt or two (2)
business days after transmittal.

2.15         “Price Schedule” means the current version or any
future revision of NOA’s schedule of purchase prices and minimum
order quantities for Finished Products and Bulk Goods.

2.16         “Printed Materials” means the Game Card label and
title sheet, user instruction booklet, poster, warranty card and LICENSEE
inserts incorporating the Artwork, together with a precautions booklet as
specified by NOA.

 

2

 

2.17         “Proprietary Rights” means any rights or applications
for rights owned, licensed or otherwise held in patents, trademarks, service
marks, copyrights, mask works, trade secrets, trade dress, moral rights
and publicity rights, together with all inventions, discoveries, ideas,
technology, know-how, data, information, processes, formulas, drawings and
designs, licenses, computer programs, software source code and object code, and
all amendments, modifications, and improvements thereto for which such patent,
trademark, service mark, copyright, mask work, trade secrets, trade dress,
moral rights or publicity rights may exist or may be sought and obtained in the
future.

2.18         “Reverse Engineer(ing)” means, without limitation, (a)
the x-ray, electronic scanning or decryption or simulation of
object code or executable code, or (c) any other technique designed to extract
source code or facilitate the duplication of a program or product.

2.19         “Security Technology” means, without limitation, any
security signature, bios, data scrambling, password, hardware security
apparatus, watermark, hologram, encryption, Digital Rights management
system, copyright management information system or any feature that facilitates
or limits compatibility with other hardware, software, or accessories or other
peripherals outside of the Territory or on a different video game system.

2.20         “Term” mean three (3) years from the
Effective Date.

2.21         “Territory” means all countries within the Western
Hemisphere and their respective territories and possessions.

3.             GRANT OF LICENSE;
LICENSEE RESTRICTIONS

3.1           Limited License Grant.   For the Term
and for the Territory, NOA grants to LICENSEE a nonexclusive, nontransferable,
limited license to use the Intellectual Property Rights to develop Games for
manufacture, advertising, marketing and sale as Licensed Products, subject to
the terms and conditions of this Agreement. 
Except as permitted under a separate written authorization from
Nintendo, LICENSEE shall not use the Intellectual Property Rights for any other
purpose.

3.2           LICENSEE Acknowledgement.  
LICENSEE acknowledges (a) the valuable nature of the Intellectual
Property Rights, (b) the right, title, and interest of Nintendo in and to the
Intellectual Property Rights, and (c) the right, title and interest of
Nintendo in and to the Proprietary Rights associated with all aspects of the
Nintendo DS system.  LICENSEE recognizes
that the Games, Game Cards and Licensed Products will embody valuable rights of
Nintendo and Nintendo’s licensors. 
LICENSEE represents and warrants that it will not undertake any act or
thing that in any way impairs or is intended to impair any part of the right,
title, interest or goodwill of Nintendo in the Intellectual Property
Rights.  LICENSEE’S use of the
Intellectual Property Rights shall not create any right, title or interest of
LICENSEE therein.

3.3           LICENSEE Restrictions and Prohibitions. 
LICENSEE is not licensed to, and covenants that, without the express
written consent of Nintendo, it will not at any time, directly or indirectly,
do or cause to be done any of the following:

 

3

 

(a)           grant access to, distribute, transmit or broadcast a
Game by electronic means or by any other means known or hereafter devised,
including, without limitation, by wireless, cable, fiber optic,
telephone lines, microwave, radiowave, computer or other device network, except
(a) as a part of wireless Game play on and among Nintendo DS systems, (b) for
the purpose of facilitating Game development under the terms of this Agreement,
or (c) as otherwise approved in writing by Nintendo.  LICENSEE shall use reasonable security
measures, customary within the high technology industry, to reduce the risk of
unauthorized interception or retransmission of any Game transmission.  No right of retransmission shall attach to
any authorized transmission of a Game,

(b)           modify, install or operate a Game on
any server or other device for the purpose of or resulting in the rental,
lease, loan or sale of rights of access to the Game,

(c)           emulate, interoperate, interface or
link a Game for operation or use with any hardware platform, software program,
accessory, computer language, computer environment, chip instruction set,
consumer electronics device, telephone, ceephone, RDA, or other device,
including for purposes of data interchange, password usage or interactive video
game play, other than a Nintendo DS system, an application approved by
Nintendo, or the Development Tools,

(d)           emulate any past, current or future
Nintendo brand video game system, or any portion thereof, in software or
hardware or any combination thereof,

(e)           embed, incorporate, or store a Game
in any media or format except the Game Card format utilized by the Nintendo DS
system, except as may be necessary as a part of the Game development process
under this Agreement,

(f)            design, implement or undertake any
process, procedure, program or act designed to circumvent the Security
Technology,

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

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

(i)            Reverse Engineer or assist in the
Reverse Engineering of all or any part of the Development Tools or the Security
Technology.

3.4           No Free-Riding No Co-Publishing Arrangements.  To
protect Nintendo’s valuable Intellectual Property Rights, to prevent the
dilution of Nintendo’s trademarks and to preclude free-riding by third parties
on the goodwill associated with Nintendo’s trademarks, the license granted
under this Agreement is limited to LICENSEE and may not be delegated or
contracted out for the benefit of a third party, or to a division, affiliate,
or subsidiary of LICENSEE.  This
Agreement, together with all submissions, representations, undertakings and
approvals contemplated of LICENSEE by this Agreement, is and shall remain the
right and obligation only of LICENSEE. 
All Printed Materials and Marketing Materials for a Game shall
prominently and accurately identify LICENSEE as NOA’s licensee.  NOA does not permit the designation or

 

4

 

identification of any third party
co-publisher for a Game on any Licensed Product Game Card case or Game Card
label, however, LICENSEE may identify a third party as a co-publisher,  licensor, developer or other partner of
LICENSEE in those Printed Materials (other than the Game Card label), Marketing
Materials or Game credits, as authorized under the Guidelines.  For purposes of clarification, LICENSEE’S
name, or logo, will appear on the Licensed Product Game Card case and Game Card
label as it appears in the preamble of this Agreement.

3.5           Development Tools.  Nintendo may
lease, loan or sell Development Tools to LICENSEE to assist in the development
of Games under this Agreement.  Ownership
and use of any Development Tools provided to LICENSEE by Nintendo shall
be subject to the terms of this Agreement and any separate license or purchase
agreement required by Nintendo.  LICENSEE
acknowledges the exclusive interest of Nintendo in and to the Proprietary
Rights associated with the Development Tools. 
LICENSEE’S use of the Development Tools shall not create any right,
title or interest of LICENSEE therein. 
LICENSEE shall not, directly or indirectly, (a) use the Development
Tools for any purpose except the design and development of Games under this
Agreement, (b) reproduce or create derivatives of the Development Tools, except
in association with the development of Games under this Agreement, (c) Reverse
Engineer the Development Tools, or (d) sell, lease, assign, lend, license,
encumber or otherwise transfer the Development Tools.  Any tools developed or derived by LICENSEE as
a result of a study of the performance, design or operation of the Development
Tools shall be considered derivative works of the Intellectual Property Rights
and shall belong to Nintendo, but may be retained and utilized by LICENSEE in
connection with this Agreement.  In no
event shall LICENSEE (i) seek, claim or file for any patent, copyright or other
Proprietary Right with regard to any such derivative work, (ii) make available
any such derivative work to any third party, or (iii) use any such derivative
work except in connection with the design and development of Games under this
Agreement.

4.             SUBMISSION OF GAME
AND ARTWORK FOR APPROVAL

4.1           Development and Sale of the Games.  LICENSEE may develop Games and have
manufactured, advertise, market and sell Licensed Products for play on the
Nintendo DS system only in accordance with this Agreement.

4.2           Third Party Developers.  LICENSEE shall not disclose the Confidential
Information, the Guidelines or the Intellectual Property Rights to any
Independent Contractor, nor permit any Independent Contractor to perform or
assist in development work for a Game, unless and until such Independent
Contractor has been approved by NOA and has executed a written confidentiality
agreement with NOA relating to the Nintendo DS system.

4.3           Delivery of Completed Game.  Upon completion of a Game, LICENSEE shall
deliver a prototype of the Game to NOA in a format specified in the Guidelines,
together with written user instructions, a complete description of any security
holes, backdoors, time bombs, cheats, “easter eggs” or other hidden features or
characters in the Game.  NOA shall
promptly evaluate the Game with regard to its technical compatibility with and
error-free operation on the Nintendo DS system. 
LICENSEE is responsible for ensuring that the Game and any other content
to be included on the Game Card complies with the Advertising Code of Conduct
of the Entertainment Software Ratings Board (“ESRB”) and that the Game has been
rated EC, E, M or T by the ESRB. 
LICENSEE shall provide NOA with a related certificate of rating for the
Game from the ESRB.

 

5

 

4.4           Approval of Completed Game.  NOA shall, within a reasonable period of time
after receipt, approve or disapprove each submitted Game.  If a Game is disapproved, NOA shall specify
in writing the reasons for such disapproval and state what corrections or
improvements are necessary.  After making
the necessary corrections or improvements, LICENSEE shall submit a revised Game
to NOA for approval.  NOA shall not
unreasonably withhold or delay its approval of any Game.  The approval of a Game by NOA shall not
relieve LICENSEE of its sole responsibility for the development, quality and
operation of the Game or in any way create any warranty for a Game or a
Licensed Product by NOA.

4.5           Submission of Artwork.  Upon submission of a completed Game to NOA,
LICENSEE shall prepare and submit to NOA the Artwork for the proposed Licensed
Product.  Within seven (7) business days
of receipt, NOA shall approve or disapprove the Artwork.  If any Artwork is disapproved, NOA shall
specify in writing the reasons for such disapproval and state what corrections
or improvements are necessary.  After
making the necessary corrections or improvements, LICENSEE shall submit revised
Artwork to NOA for approval.  NOA shall
not unreasonably withhold or delay its approval of any Artwork.  The approval of the Artwork by NOA
development and quality of the Artwork or in any way create any warranty for
the Artwork or any Licensed Product by NOA.

4.6           Artwork for Bulk Goods.  If LICENSEE submits an order for Bulk Goods,
all Artwork shall be submitted to NOA in advance of NOA’s acceptance of the
order and no production of Printed Materials shall occur until such Artwork has
been approved by NOA under Section 4.5 herein.

5.             ORDER PROCESS, PURCHASE PRICE, PAYMENT AND DELIVERY

5.1           Submission of Orders by LICENSEE.  LICENSEE may at any time submit written
purchase orders to NOA for any approved Licensed Product title.  The purchase order shall specify whether it
is for Finished Products or Bulk Goods. 
The terms and conditions of this Agreement shall control over any
contrary terms of such purchase order or any other written documents submitted
by LICENSEE.  All orders are subject to
acceptance by NOA in Redmond, WA.

5.2           Purchase Price and Minimum Order
Quantities.  The purchase price and
minimum order quantities for Finished Products and Bulk Goods shall be set
forth in NOA’s then current Price Schedule. 
The purchase price includes the cost of manufacturing together with a
royalty for the use of the Intellectual Property Rights.  No taxes, duties, import fees or other
tariffs related to the development, manufacture, import, marketing or sale of
the Licensed Products are included in the purchase price and all such taxes are
the responsibility of LICENSEE (except for taxes imposed on NOA’s income).  The Price Schedule is subject to change by
NOA at any time, provided, however, that any price increase shall be applicable
only to purchase orders submitted, paid for, and accepted by NOA after the
effective date of the price increase.

 

6

 

5.3           Payment.  Upon placement of an order with NOA, LICENSEE
shall pay the full purchase price to NOA either (a) by placement of an
irrevocable letter of credit in favor of NOA and payable at sight, issued by a
bank acceptable to NOA and confirmed, if requested by NOA, at LICENSEE’S
expense, or (b) in cash, by wire transfer to NOA’s designated account.  All associated banking charges are the
responsibility of the LICENSEE.

5.4           Shipment and Delivery.  All Licensed Products shall be delivered to
LICENSEE EXW Ex works Japan (as defined by Incoterms 2000), or such other
delivery point specified by NOA, with shipment at LICENSEE’S direction and
expense.  Orders may be delivered by NOA
in partial shipments, each directed to not more than two (2) destinations
designated by LICENSEE within the Territory. 
Title to the Licensed Products shall vest.

6.             MANUFACTURE OF THE LICENSED PRODUCT 

6.1           Manufacturing.  Nintendo shall be the exclusive source for
the manufacture of the Game Cards, and shall control all aspects of the
manufacturing process, including the selection of the locations and
specifications for any manufacturing facilities, determination of materials and
processes, appointment of suppliers and subcontractors and management of all
work-in-progress.

6.2           Manufacture of the Licensed
Products.  Upon acceptance by NOA of
a purchase order for an approved Licensed Product title and payment as provided
for under Section 5.3 herein, NOA will arrange for the manufacture of Finished
Product or Bulk Goods, as specified in LICENSEE’S purchase order.

6.3           Security Features.  The final release version of the Game, Game
Cards and Printed Materials shall include such Security Technology as Nintendo,
in its sole discretion and at its sole expense, may deem necessary or
appropriate.

6.4           Production of Bulk Goods Printed
Materials.  For Bulk Goods, LICENSEE
shall arrange Goods, LICENSEE shall assemble the Game Cards and Printed
Materials into the Licensed Products. 
Games may be sold or otherwise distributed by LICENSEE only in fully
assembled and shrink-wrapped Licensed Products.

6.5           Prior Approval of LICENSEE’S
Independent Contractor.   Prior to
the placement of a purchase order for Bulk Goods, LICENSEE shall obtain NOA’s
approval of any Independent Contractors selected to perform LICENSEE’S
production and assembly operations. 
LICENSEE shall provide NOA with the names, addresses and all business
documentation reasonably requested by NOA for such Independent
Contractors.  NOA may, prior to approval
and at reasonable intervals thereafter, (a) require submission of additional
business or financial information regarding the Independent Contractors, (b)
inspect the facilities of the Independent Contractors, and (c) be present to
supervise any work on the Licensed Products to be done by any Independent Contractors.  If at any time NOA deems an Independent
Contractor to be unable to meet quality, security or performance standards
reasonably established by NOA, NOA may refuse to grant its approval or withdraw
its approval upon Notice to Licensed Product by such Independent Contractor
until NOA’s concerns have been resolved to its satisfaction or until LICENSEE
has selected and received NOA’s approval of another Independent
Contractor.   NOA may establish preferred
or required supply sources for the Game Card case, or select components of the
Printed Materials, which sources shall be deemed pre-approved in accordance 

 

7

 

with this Section 6.5. 
LICENSEE shall comply with all sourcing requirements established by NOA.

6.6           NOA Inserts for Bulk Goods.  NOA, at its option and at its sole expense,
may provide LICENSEE with NOA produced promotional materials (as provided for
at Section 7.7(a) herein), that LICENSEE agrees to include in the assembly of
the Licensed Products.

6.7           Sample Printed Materials and Bulk
Goods.  Within a reasonable period of
time after LICENSEE’S assembly of the initial order for a Bulk Goods title,
LICENSEE shall provide NOA with (a) one (1) sample of the fully assembled,
shrink-wrapped Licensed Product, and (b) fifty (50) samples of LICENSEE
produced Printed Materials for such Licensed Product.

6.8           Retention of Sample Licensed
Products by Nintendo.  Nintendo may,
at its own expense, manufacture reasonable quantities of the Game Cards or the
Licensed Products to be used for archival purposes, legal proceedings against
infringers of the Intellectual Property Rights or for other lawful purposes
(but not for resale).

6.9           Retention of User Instruction
Booklet by NOA.  For use in training
consumer support personnel, product orientation and other consumer support
activities, as well as for archival purposes, NOA may (a) retain (or request
that LICENSEE provide to NOA) a reasonable number of copies of the user
instruction booklet for each Licensed Product, and (b) make a reasonable number
of copies of the user instruction booklet for each Licensed Product.

7.             MARKETING AND
ADVERTISING 

7.1           Approval of Marketing Materials.  LICENSEE represents and warrants that the
Marketing Materials shall (a) be of high quality and comply with the
Guidelines, (b) comply with all ESRB advertising, marketing and merchandising
guidelines, and (c) comply with all applicable laws and regulations in those
jurisdictions in the Territory where they will be used or distributed.  All LICENSEE controlled websites featuring
the Games shall adopt a privacy policy that is consistent with the principles
and guidelines issued by the ESRB and that complies with the Children’s Online
Privacy Protection Act.  Prior to actual
use or distribution, LICENSEE shall submit to NOA for review samples of all
proposed Marketing Materials.  NOA shall,
within ten (10) business days of receipt, approve or disapprove the quality of
such samples.  If any of the samples are
disapproved, NOA 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 NOA.  No Marketing Materials shall be used or
distributed by LICENSEE without NOA’s prior written approval.  NOA shall not unreasonably withhold or delay
its approval of any proposed Marketing Materials.

7.2           No Bundling.  To protect Nintendo’s valuable Intellectual
Property Rights, to prevent the dilution of Nintendo’s trademarks and to
preclude free-riding by non-licensed products on the goodwill associated with
Nintendo’s trademarks, LICENSEE shall not market or distribute any Licensed
Products that are bundled with (a) any peripheral designed for use with the
Nintendo DS system that has not been licensed or approved in writing by NOA, or
(b) any

 

8

 

other product or service where Nintendo’s sponsorship, association,
approval or endorsement might be suggested by the bundling of the products or
services.

7.3           Warranty and Repair.  LICENSEE shall provide the original consumer
with a minimum ninety (90) day limited warranty on all Licensed Products.  LICENSEE shall also provide reasonable
product service, including out-of-warranty service, for all Licensed Products.

7.4           Business Facilities.  LICENSEE agrees to develop and maintain (a)
suitable office under this Agreement, (b) necessary warehouse, distribution,
marketing, sales, collection and credit operations to facilitate proper
handling of the Licensed Products, and (c) customer service and Game
counseling, including telephone service, to adequately support the Licensed
Products.

7.5           No Sales Outside the Territory.  LICENSEE represents and warrants 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 NOA’s reasonable judgment, significantly
impair the ability of a consumer to play the Game, NOA may, after consultation
with LICENSEE, require the LICENSEE to recall the Licensed Product and
undertake suitable repairs or replacements.

7.7           NOA Promotional Materials,
Publications and Events.  At its
option, NOA may (a) insert in the Printed Materials for the Licensed Products
promotional materials concerning Nintendo Power magazine or other NOA products,
services or programs, (b) utilize screen shots, Artwork and information
regarding the Licensed Products in Nintendo Power, Nintendo Power  Source,
official Nintendo-sponsored web sites, or other advertising, promotional or
marketing media that promotes Nintendo products, services or programs, and (c)
exercise public performance rights in the Games and use related trademarks and
Artwork in connection with NOA sponsored contests, tours, conventions, trade
shows, press briefings and similar events that promote the Nintendo DS system.

7.8           Nintendo Gateway System.  To promote and increase demand for games on
Nintendo video game systems, NOA licenses a system (the “Nintendo Gateway
System”) in various non-coin activated customers play games on specially
adapted Nintendo video game systems. If NOA identifies a Game for possible
license on the Nintendo Gateway System, the parties agree to conduct good faith
negotiations toward including the Game in the Nintendo Gateway System.

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 the Nintendo DS system or the
Development Tools, including, but not limited to, (a) all current or future
information, know-how, techniques, methods, information, tools, emulator
hardware or software, software development specifications and/or trade secrets,
(b) any patents or patent applications, (c) any business, marketing 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

 

9

 

writing, orally, visually, or in the form of drawings, technical
manifest, in any form, the above listed information.  Confidential Information shall not include
(i) data and information that was in the public domain prior to LICENSEE’S
receipt of the same hereunder, or that subsequently becomes part of the public
domain by publication or otherwise, except by LICENSEE’S wrongful act or
omission, (ii) data and information that 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 under an
obligation of confidentiality that is still in force, and (iii) data and
information that LICENSEE can show was received by it from a third party who
did not acquire the same directly or indirectly from Nintendo 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 NOA is given Notice thereof at
least thirty (30) days prior to such disclosure, or such lesser period if
required.  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 NOA, shall cooperate in
the preparation and entry of appropriate protective orders.

8.3           Disclosure and Use.  NOA 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 CfCI:NSEE’s 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 employees of their obligation of confidentiality as
provided herein.  LICENSEE shall require
each such employee to retain in confidence the Confidential Information
pursuant to a written non-disclosure agreement between LICENSEE and such
employee.  LICENSEE shall use its best
efforts to ensure that its employees working with or otherwise having 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 to any Independent Contractor without the
prior written consent of NOA.  Any
Independent Contractor seeking access to Confidential Information shall be
required to enter into a written non-disclosure agreement with NOA prior to
receiving any access to or disclosure of the Confidential Information from
either LICENSEE or NOA.

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 NOA’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 Securities and
Exchange Commission (“SEC”), provided that all Confidential Information
regarding NOA shall be redacted from such

 

10

 

disclosures to the maximum extent allowed by the SEC, (d) in response
to lawful process, subject to a written protective order approved in advance by
NOA, and (e) to a third party proposing to enter into a business transaction
with LICENSEE or with NOA, 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 NOA 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 NOA 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 terms 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 other intellectual property rights
used on or in association with the development, advertising, marketing and sale
of the Licensed Products and the Marketing Materials, or (ii) the holder of
such rights to the trademarks, copyrights and other intellectual property
rights that have been licensed from a third party as are necessary for the
development, advertising, marketing and sale of the Licensed Products and the
Marketing Materials under this Agreement.

9.2           NOA’s Representations and
Warranties.   NOA 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 NOA does not conflict with any agreement or
understanding to which NOA may be bound.

9.3           INTELLECTUAL PROPERTY RIGHTS
DISCLAIMER BY NOA.   NOA MAKES NO
REPRESENTATION OR WARRANTY CONCERNING THE SCOPE OR VALIDITY OF THE INTELLECTUAL
PROPERTY RIGHTS.   NOA DOES NOT WARRANT
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 PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHTS OF A
THIRD PARTY.  

 

11

 

ANY WARRANTY THAT MAY BE PROVIDED IN ANY APPLICABLE
PROVISION OF THE UNIFORM COMMERCIAL CODE OR ANY OTHER COMPARABLE LAW OR STATUTE
IS EXPRESSLY DISCLAIMED.   LICENSEE
HEREBY ASSUMES THE RISK OF INFRINGEMENT.

9.4           GENERAL DISCLAIMER BY NOA.   NOA 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.   NOA DISCLAIMS ALL WARRANTIES 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 NOA NOR NINTENDO CO. , LTD. (OR THEIR RESPECTIVE AFFILIATES, LICENSORS
OR SUPPLIERS) 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 NOA, THE MANUFACTURE OF THE LICENSED PRODUCTS OR
THE USE OF THE LICENSED PRODUCTS ON ANY NINTENDO VIDEO GAME SYSTEM BY LICENSEE
OR ANY END USER.

10.          INDEMNIFICATION 

10.1         LICENSEE’S Indemnification.   LICENSEE shall indemnify and hold harmless
NOA and Nintendo Co., Ltd. (and any of their respective affiliates,
subsidiaries, licensors, suppliers, officers, directors, employees or agents)
from any claims, 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, that result from or
are in connection with:

(a)           a breach of any of the provisions,
representations or warranties undertaken by LICENSEE 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 the Licensed Products or the Marketing Materials,

(c)           any claims alleging 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 of-the Licensed Products, and

(d)           any federal, state or foreign civil
or criminal actions relating to the design, development, advertising,
marketing, sale or use of the Licensed Products or the Marketing Materials.

NOA and LICENSEE shall give prompt Notice to the other
of any indemnified claim under this Section 10.1.  With respect to any third party claim subject
to this indemnity clause, LICENSEE, as indemnitor, shall have the right to
select counsel and to control the defense and/or settlement 

 

12

 

thereof.   NOA
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 such claim in which (i) NOA or Nintendo Co.,
Ltd. has been named as a party, or (ii) claims relating to the Intellectual
Property Rights have been asserted, without NOA’s prior written consent.   NOA shall provide reasonable assistance to
LICENSEE in its defense of any such claim.

10.2         LICENSEE’S Insurance.   LICENSEE shall, at its own expense, obtain a
commercial general liability insurance policy (including coverage for
advertising injury and product liability claims) from an insurance company
rated at least B+ by A.M. Best.  Such
policy of insurance shall be in an amount of not less than Five Million Dollars
($5,000,000 USD) on a per occurrence basis (not claims made) and shall provide
for adequate protection against any suits, claims, loss or damage arising out
of or relating to the Licensed Products. 
Such policy shall name NOA and Nintendo Co., Ltd. as additional insureds
and shall specify that it may not be canceled without thirty (30) days’ prior
written Notice to NOA.  A Certificate of
Insurance shall be provided to NOA’s Licensing Department not later than the
date of the initial order of Licensed Products under this Agreement.  If LICENSEE fails to provide NOA’s Licensing
Department with period of two (2) years thereafter, NOA, in its sole discretion
may 1) terminate this Agreement in accordance with Section 13.2 herein; or 2)
secure comparable insurance for the benefit of NOA and Nintendo Co., Ltd. only,
and not for Licensee, at LICENSEE’S expense.

10.3         Suspension of Production.   In the event NOA deems itself at risk with
respect to any claim, action or proceeding under this Section 10, NOA 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,
action or proceeding.

11.          PROTECTION OF
PROPRIETARY RIGHTS 

11.1         Joint Actions Against Infringers.   LICENSEE and NOA 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 NOA for their respective reasonable attorneys’ fees and costs incurred in
bringing such action, pro rata, and any remaining recovery shall be distributed
to LICENSEE and NOA, pro rata, based upon the fees and costs incurred in
bringing such action.

11.2         Actions by LICENSEE.   LICENSEE, without the consent of NOA, may
bring any action or proceeding relating to an infringement or potential
infringement of LICENSEE’s Proprietary Rights in the Licensed Products.   LICENSEE will have the right to retain all
proceeds it may derive from any recovery in connection with such actions.

11.3         Actions by NOA.   NOA, without the consent of LICENSEE, may
bring any action or proceeding relating to an infringement or potential
infringement of the Intellectual Property Rights.   NOA 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 

 

13

 

obligations under this Agreement, including, but not
limited to, (a) a voluntary assignment, transfer, sale, sublicense, 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 effective without NOA’s prior written consent, which consent may be
withheld by NOA for any reason whatsoever in its sole discretion.   In the event of an attempted Assignment in
violation of this provision, NOA shall have the right at any time, at its sole
option, to immediately terminate this Agreement.   Upon such termination, NOA 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 NOA 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 Assignment and the nature and extent of the
rights and obligations that LICENSEE proposes to assign.  NOA may, in its sole discretion, approve
Assignment, any attempted or purported Assignment shall be deemed disapproved
and NOA shall have the unqualified right, in its sole discretion, to terminate
this Agreement at any time.   Upon
termination, NOA 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 -Lb) permit access to Nintendo’s Confidential Information by any
proposed assignee or other third party, without the prior written consent of
NOA to such disclosure.

13.          TERM AND TERMINATION

13.1         Term.   This Agreement shall commence on the
Effective Date and shall continue for the Term, unless earlier terminated as
provided for herein, or extended by a written amendment to this Agreement.

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

 

14

 

13.3         Bankruptcy.   At NOA’s option, this Agreement may be
terminated immediately and, (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 (a) the expiration of this Agreement,
(b) its termination other than by LICENSEE’s breach, or (c) termination of this
Agreement by NOA after one hundred twenty days (120) Notice to LICENSEE in the
event NOA reasonably believes that LICENSEE has developed, marketed, or sold a
product that infringes any intellectual property rights of NOA or its parent
company, Nintendo Co., Ltd., anywhere in the world (provided that if the
parties are able to resolve such alleged infringement within such 120 day
period, such termination shall not take effect), 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 proof of such destruction (certified by an officer of
LICENSEE) shall be provided to NOA.

13.5         Termination by LICENSEE’s Breach.   If this Agreement is terminated by NOA 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 proof of such destruction
(certified by an officer of LICENSEE) shall be provided to NOA.

13.6         Breach of NDA or Other NOA License
Agreements.   At NOA’s option, any
breach by LICENSEE of (a) the NDA, or (b) any other license agreement between
NOA and LICENSEE relating to the development of games for any Nintendo video
game system that is not cured within the time period for cure allowed under the
applicable agreement, shall be considered a material breach of this Agreement
entitling NOA to terminate this Agreement in accordance with Section 13.5
herein.

13.7         No Further Use of the Intellectual
Property Rights.   Upon expiration and/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 Licensed Products authorized under Section 13.4 herein.   LICENSEE shall, within thirty (30) days
thereafter, return or destroy all Guidelines, writings, drawings, models, data,
tools and other materials and things in LICENSEE’s possession or in the
possession of any past or present employee, agent or contractor receiving the
information through LICENSEE, that constitute or relate to or disclose any
Confidential Information, without making copies or otherwise retaining any such
information.   Proof of any destruction
shall be certified by an officer of LICENSEE and promptly provided to NOA.

13.8         Termination by NOA’s Breach.   If this Agreement is terminated by LICENSEE
as a result of a breach of its terms or conditions by NOA, 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         Export Control.   LICENSEE agrees to comply with the export
laws and regulations of the United States and any other country with
jurisdiction over the Licensed 

 

15

 

Products, Confidential Information, Intellectual
Property Rights, Development Tools or either party.

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 inadequate supply of
suitable materials or any other cause that 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, NOA
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 related to the development and sale of the Licensed Products and the
Marketing Materials.   Upon reasonable
Notice to LICENSEE, NOA may, at its expense, audit LICENSEE’S records, reports
and other information related to LICENSEE’S compliance with this Agreement.

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 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 that may reasonably be interpreted or construed as
surviving, the rights and obligations set forth in Sections 3, 8, 9, 10, 13 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 the State of Washington, without regard to its conflict of laws
principles.   Any legal action (including
judicial and administrative proceedings) with respect to any matter arising
under or growing out of this Agreement, shall be brought in a court of
competent jurisdiction in King County, Washington.   Each party hereby consents to the
jurisdiction and venue of such courts for such purposes.

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

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.

 

16

 

14.9         Counterparts and Signature by
Facsimile.   This Agreement may be
signed in counterparts, that shall together constitute a complete
Agreement.   A signature transmitted by
facsimile 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.

 

 

	
  NOA:

  	
   

  	
  LICENSEE:

  
	
   

  	
   

  	
   

  	
   

  
	
  NINTENDO OF AMERICA INC.

  	
   

  	
  ACTIVISION PUBLISHING, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James R. Cannataro

  	
   

  	
  By:

  	
  /s/ George L. Rose

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  James R. Cannataro

  	
   

  	
  Name:

  	
  George L. Rose

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Executive VP, Administration

  	
   

  	
  Title:

  	
  Sr. VP and General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  11/15/2004

  	
   

  	
  Date:

  	
   

  

 

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}]]