COMMERCIAL EXPLOITATION LICENSE AGREEMENT FOR QUAKE II This Commercial Exploitation License Agreement for QUAKE II (the "Agreement") is between Id Software, Inc., a Texas corporation, (hereinaf- ter "Id Software") and Licensee (as identified on the signature page hereof) and is made effective beginning on the date of last signature hereto (the "Effective Date"). R E C I T A L S WHEREAS, Id Software is the owner and developer of the computer soft- ware game entitled QUAKE II (the "Game"); WHEREAS, Id Software desires to license certain limited non-exclusive rights regarding the Game to Licensee; and WHEREAS, Licensee desires to receive a limited license for such rights. T E R M S A N D C O N D I T I O N S NOW, THEREFORE, for and in consideration of the mutual premises con- tained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned parties do hereby agree as follows: 1. Definitions. As used in this Agreement, the parties hereto agree the words set forth below shall have the specified meanings: a. "Authorized Copy" shall mean one (1) copy of the Subject Game, operable only on a personal computer, actually purchased from an Id Software approved retailer; and b. "Subject Game" shall mean the full registered version of the Game on a CD-ROM and shall not mean the shareware or any other version; and c. "Trademarks" shall mean, collectively, QUAKE II?, the id logo and the Id Software name. 2. Grant of Rights. Subject to the terms and provisions of this Agreement, Id Software hereby grants to Licensee and Licensee hereby ac- cepts a limited, world-wide (except as otherwise provided herein), non- exclusive, non-transferable, and non-assignable license to offer, on either a "pay per play" or a "no charge" basis, the Authorized Copy as installed in a network server and/or a personal computer at only those sites owned and/or operated by Licensee. Licensee may not install an Authorized Copy on more than one (1) personal computer or network server. Licensee must actually purchase an Authorized Copy for each installation an a network server and personal computer. 3. Reservation of Rights and Prohibitions. Id Software expressly re- serves all rights not granted herein. Any use by Licensee of the Authorized Copy not expressly permitted in paragraph 2. above is expressly prohibited and any such unauthorized use shall constitute a material breach of this Agreement by Licensee. Under no circumstances shall Licensee copy, reproduce, manufacture or distribute (free of charge or otherwise) the Authorized Copy or the Subject Game. Licensee shall not reverse engineer, decompile, disassemble, modify or alter the Authorized Copy. Licensee is not receiving any rights hereunder regarding the Trademarks or any artwork, sound, music or other element of the Subject Game. 4. Additional Obligations. In addition to the obligations of Licen- see otherwise set forth in this Agreement, during the Term, and thereafter where specified, Licensee agrees that: a. Licensee will not attack or challenge the title of Id Software to the Subject Game or the Trademarks or any copyright, patent or trademark or other intellectual property right related thereto and Licensee will not attack or challenge the validity of the license granted hereunder during the Term or thereafter; and b. Licensee will promptly inform Id Software of any unauthorized use of the Authorized Copy, the Subject Game or the Trademarks, or any portions thereof, and will reasonably assist Id Software in the en- forcement of all rights Id Software may have against such unauthorized users. 5. Financial Obligations. a. Initial Fee. Licensee, upon Licensee's delivery to Id Software of Licensee's request for Id Software to enter into this Agreement, shall pay Id Software the sum of U.S. Five Hundred and No/100 Dollars ($500.00) (the "Initial Fee") as an administrative processing fee. Upon Id Software's execution of this Agreement, the Initial Fee shall become non-refundable. The Initial Fee shall not be recoupable as a credit against Royalties. b. Royalties. Licensee agrees to pay Id Software a royalty ("Roy- alty") at the rate of twelve and one-half (12.5%) of Net Income. The term "Net Income" shall mean all revenue received by Licensee from the commercial use of the Authorized Copy, less only Licensee's actual, reasonable, necessary and documented costs relating directly to such use. A Royalty shall only be due for those months in which Licensee's gross revenue from the commercial use of the Authorized Copy exceeds U.S. Five Thousand Dollars ($5,000.00) and in such months Licensee shall pay a full Royalty on one hundred percent (100%) of the gross revenue received. For those months where gross revenue is Five Thousand and No/100 Dollars ($5,000.00) or less, Licensee shall not be obligated to pay a Royalty. c. Rendition of Statements. Licensee shall account to Id Software with regard to transactions hereunder within forty-five (45) days following the conclusion of each calendar quarter. Licensee shall deliver a Royalty statement to Id Software even though no Royalty may be due for the period covered by such Royalty statement. The Royalty statements shall show in summary form the appropriate cal- culations relating to the computation of Royalties, if any. The Royalty statements shall also show the Gross Revenue received by Licensee per month. The Royalties payable to Id Software hereunder shall be remitted with the particular Royalty statement indicating such amount to be due. d. Books of Account and Audits. Licensee shall keep books of account (the "Books of Account") relating to Licensee's commercial use of the Authorized Copy on the basis of generally accepted accounting principles. Licensee shall maintain such Books of Account for a period of at least two (2) years after the expiration or earlier termination of this Agreement; provided, however, that Licensee shall not be required to keep such Books of Account longer than seven (7) years from their date of origination. Id Software may, upon reasonable notice and at its own expense, audit the applicable Books of Account at Licensee's office, in order to verify the ac- curacy of Royalty statements rendered hereunder. Any such audit shall take place during reasonable business hours and in such manner so as not to unreasonably interfere with Licensee's normal business activities. If in an audit of Licensee's Books of Account it is determined that there is a short fall of ten percent (10%) or more in Royalties reported for any calendar month, in addition to payment of such short fall and interest as may be due, as provided herein, Licensee shall reimburse Id Software for the full out-of-pocket costs of the audit including reasonable travel costs and expenses; provided, however, that the amount of reimbursement paid by Licensee shall not exceed U.S. Fifteen Thousand Dollars ($15,000.00) for any audit. e. Payment of the Royalty. Licensee assumes all risks associated with fluctuations in foreign currency exchange rates. Licensee shall pay and agrees to pay all sums due Id Software in United States Dollars. With respect to Royalties used for commercial use outside the United States, other currencies shall be exchanged at the Expense of Lic- ensee into United States Dollars using the bid price quoted at the Citibank, N.A. of New York, New York, for the purchase of United States Dollars at the close of business on the last day of the calendar quarter during which any amounts accrue. Payment of the Royalties shall be made in Dallas County, Texas. f. Interest. If Id Software does not receive the applicable Royalty payment on or before the due date of such payment, Licensee agrees to pay and shall pay interest on past due Royalties owed to Id Software from such date as specified in the following sentence at a rate equal to the lesser of (i) eighteen percent (18%) per annum and (ii) the maximum interest rate per annum allowed by applicable law. For purposes of clarification, the interest referenced in the immediately preceding sentence will only begin to accrue on the first (1st) day following the due date of the due and owing, but unpaid, Royalty payment. NOTHING HEREIN SHALL BE CONSTRUED AS A REQUEST OR DEMAND BY ID SOFTWARE FOR INTEREST AT A RATE HIGHER THAN ALLOWED BY APPLICABLE LAW. IT IS THE INTENT OF THE PARTIES HERETO THAT NO INTEREST BE CHARGED HEREUNDER WHICH EXCEEDS THE MAXIMUM RATE ALLOWED BY APPLICABLE LAW. THE INTEREST RATE APPLICABLE TO PAST DUE ROYALTY PAYMENTS SHALL NEVER EXCEED THE MAXIMUM RATE ALLOWED BY APPLICABLE LAW, UNDER ANY CIRCUMSTANCES. 6. Ownership. Title to and all ownership rights in and to the Sub- ject Game and the Trademarks and the copyrights, trade secrets, trademarks, patents and all other intellectual property rights related thereto shall remain with Id Software which shall have the exclusive right to protect the same by copyright or otherwise. Licensee shall have no ownership rights in or to the Subject Game or the Trademarks and Licensee shall not own any intellectual property rights regarding the Authorized Copy, including, without limitation, the copyright in and to the Authorized Copy. Licensee acknowledge...
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