If you use the Licensed Products (as defined in the coherence Software License Agreement) in connection with client-hosting or self-hosting, you may be required to pay royalties to coherence based on the worldwide gross revenue attributable to any Royalty Product that includes or utilises the Licensed Products.
This Royalty Addendum sets out the terms under which such royalties are calculated, reported, and paid, and specifies which types of revenue are excluded from the royalty obligation.
If you Distribute a Royalty Product or generate advances or other revenue for a Royalty Product prior to its Distribution, you must comply with the terms of this Royalty Addendum.
DEFINITIONS.
a) "Distribution" (or "Distribute") means, with respect to code or a Product, to provide or otherwise make a copy of the code or Product available publicly or to any other person or entity or make its functionality available on a network.
b) "Royalty Payment(s)" means the amount due to coherence calculated by multiplying the Royalty Revenue by the applicable Royalty Rate.
c) "Royalty Product" means any Product that is intended for sale, or any other form of commercialisation such as in-game or in-app purchases, in-game or in-app advertising, paid subscriptions, payable downloadable content and updates, or any other form of directly generating revenue from the distribution of the product.
d) "Royalty Rate" means the applicable percentage of Royalty Revenue you agree to pay to coherence.
e) "Royalty Revenue" means all worldwide gross revenue attributable to each Royalty Product minus any allowed exclusions enumerated in Clause 4 of this Royalty Addendum.
f) "Product" means products, services, or any other projects that either (a) are made using or utilising the Licensed Products or any parts thereof or (b) combine the Licensed Products or any parts thereof with any other software or content.
DISTRIBUTING ROYALTY PRODUCTS.
2.1. Before you Distribute a Royalty Product that will generate revenue, you must give coherence notice of your intended Distribution as early as reasonably possible and in any event prior to the Distribution of the Royalty Product.
2.2. Likewise, if you plan on beginning to generate revenue from a Royalty Product that you have already Distributed, you must give coherence notice as early as reasonably possible before the Royalty Product is used to generate revenue.
ROYALTY PAYMENTS.
3.1. If you are Distributing a Royalty Product you might be obligated to pay Royalty Payments which are calculated based on the Royalty Rate and the Product’s worldwide gross revenue.
3.2. If a Royalty Product has previously been Distributed without use of the Licensed Products and is subsequently updated or modified to include or utilise the Licensed Products, royalties under this Addendum apply only to Royalty Revenue generated from the Distribution or use of the updated version of the Product that includes or utilises the Licensed Products. Revenue generated prior to the public release of such updated version is excluded from Royalty Revenue.
3.3. The Royalty Rate is equal to 3% of all Royalty Revenue.
3.4. Worldwide gross revenue includes all revenue directly generated by your Royalty Product, regardless of who receives the revenue and regardless of whether you Distribute your Royalty Product to end users directly, self-publish via the App Store or any similar store, or work with a publisher or distributor. Royalty Revenue includes gross revenue:
a) resulting from any and all sales of a Royalty Product to end users through any and all media, including but not limited to digital and retail;
b) resulting from any and all in-app purchases, downloadable content, microtransactions, subscriptions, sale, transfer, or exchange of user-generated content for use with a Royalty Product, or redemption of virtual currency which directly affects the operation of the Royalty Product, whether redeemed within the Royalty Product or externally;
c) from in-app advertising and affiliate programs;
d) from any advance payments for a Royalty Product (from a publisher or otherwise);
e) received in connection with a Royalty Product’s inclusion in a streaming, subscription, or other game-delivery service (e.g., Apple Arcade, Microsoft GamePass, or any similar or successor services);
f) received in connection with access to your Royalty Product or features or functionality within your Royalty Product; and
g) received in any other form actually attributable to a Royalty Product.
3.5. Royalty Payments are due for every calendar quarter in which Royalty Revenue exceeds $15,000. This obligation is ongoing and applies independently to each such quarter for as long as the Royalty Product generates revenue above this threshold.
REVENUE CALCULATION EXCLUSIONS.
4.1. Some gross revenue is excluded from the calculation of Royalty Revenue.
4.2. Quarterly Minimum Exclusion: You will not be obligated to pay us any royalty payments for calendar quarters in which you don’t reach a certain threshold. Revenue attributable to a Royalty Product from a calendar quarter during which the gross revenue for such a Royalty Product is less than $15,000 is excluded from the calculation of Royalty Revenue.
4.3 Quarterly Maximum Exclusion: In any calendar quarter in which you exceed a certain threshold, you will not be obligated to pay us any royalty payments for any amounts above that threshold. Revenue attributable to a Royalty Product from a calendar quarter during which the gross revenue for such a Royalty Product is more than $5,000,000, any revenue in excess of $5,000,000 in that calendar quarter is excluded from the calculation of the Royalty Revenue.
4.4. Royalty Alternative Exclusion: You may have already made a royalty payment or have other fee obligations to coherence on certain revenue generated by a Royalty Product. To prevent you from being charged twice by coherence on such revenue, the following exclusions apply to the calculation of Royalty Revenue:
a) Royalties that you pay on an advance payment of revenue for a Royalty Product that is recoupable by the payer, such as a publisher, may be credited against future royalty payments that you incur under this Agreement for that Royalty Product.
b) Any fees that you have already paid for the coherence Pro subscriptionplan within a quarter, will be deducted from Royalty Payment from that quarter.
4.5. Other Exclusions: The following are also excluded from the calculation of Royalty Revenue:
a) Revenue from ancillary products that are not software and that do not contain embedded information (such as QR codes) that affects the operation of the Royalty Product (e.g., comic books, soundtracks, apparel);
b) Cash prizes given with awards earned for the Royalty Product;
c) Revenue from donations for a Product that are not tied to Royalty Product access or in-Royalty Product benefits; and
d) Sales or value added taxes charged to end users of the Royalty Product.
REVENUE REPORTING AND PAYMENTS.
5.1. Within 30 days after the end of each calendar quarter in which you earn Royalty Revenue, you must report the Royalty Revenue in writing via email to revenue@coherence.io on a per Product basis.
5.2. coherence will issue royalty invoices for the reported quarterly Royalty Revenue, and such invoices shall be payable within 14 calendar days of the invoice date.
