Exhibit 10.6
Microsoft Corporation Tel 425 882 8080
One Microsoft Way Fax 425 936 7329
Redmond, WA 98052-6399 http://www.microsoft.com/
[MICROSOFT LOGO]
March 15, 2002
Michael Hand
Activision
3100 Ocean Park Boulevard
Santa Monica, CA 90405
Re: Amendment to Microsoft Corporation Xbox(TM) Publisher License Agreement
Dear Michael,
I am writing to inform you of several changes to the Xbox publisher licensing
program. First, as you are already aware, Microsoft Licensing, Inc. ("Microsoft"
for purposes of this letter) has taken over responsibility for the Xbox
publisher licensing program. In conjunction therewith, this letter shall serve
as your notice that your Xbox Publisher License Agreement ("PLA") has been
assigned to MSLI, pursuant to Section 12.3 of the PLA. I will remain your
Account Manager and primary contact for Xbox-related issues.
Several additional changes have been made to the Xbox publisher licensing
program. This letter outlines those changes and upon full execution shall also
serve as an amendment to your PLA as of the latter of the two signature dates
below. Capitalized terms used in this letter shall have the same meanings
ascribed to them in the PLA. In the event of any inconsistency between this
letter and the PLA, the terms of this letter shall control.
1. Submissions and Approvals. By now, you should have received information about
the updated game submission and approval process. The following updated approval
requirements shall replace Sections 2.1.3 - 2.1.5 of the PLA:
The approval process is divided into four phases comprised of concept
approval, "pre-certification", "certification", and Art & Marketing
Materials approval. A Software Title must be submitted to Microsoft for
evaluation at each of the four phases.
Pre-certification replaces the "Beta Version" and playtesting
requirement of the PLA. "Pre-Certification" is the first required stage of
the approval process wherein Microsoft conducts, among other things,
technical screen tests to provide feedback and/or identify any issues that
may prevent the Software Title from being approved during the Certification
phase. Pre-Certification is further defined in the Xbox Guide. At the
Pre-Certification submission, Licensee shall deliver to Microsoft a version
of the Software Title that includes all current features of the Software
Title and such other content as may be required under the Xbox Guide. Upon
receipt, Microsoft shall conduct technical screen testing and/or other
testing consistent with the Xbox Guide and will subsequently provide
Licensee with feedback regarding such testing. Pre-Certification and
Certification submissions evaluate different aspects of the Software Title
and therefore satisfactory feedback regarding Pre-Certification is not
necessarily an indication that the Software Title will be approved
following the Certification submission.
Certification is the final stage of the approval process following
Pre-Certification wherein Licensee delivers its proposed final version of
the Software Title, and Microsoft shall approve or disapprove of such
Software Title for distribution. Certification is further defined in the
Xbox Guide. Licensee shall deliver to Microsoft Licensee's proposed final
release version of the applicable Software Title that is complete and ready
for manufacture and commercial distribution. Such version shall provide the
final content rating certification (e.g. ESRB, ELSPA) with identified
program errors corrected, and with any and all changes previously requested
by
Microsoft implemented. Microsoft shall conduct compliance, compatibility,
functional and other testing consistent with the Xbox Guide ("Certification
Testing") and shall subsequently provide Licensee with the results of such
testing.
Certification for a Software Title may be granted based upon (1)
successful completion of the Certification Testing; (2) conformance with
the approved Concept as identified in the Concept Summary; (3) consistency
with the goals and objectives of the X box console platform; and (4)
compliance with other requirements as set forth in this Agreement.
If warranted on the basis of its tests, Microsoft shall make
reasonable efforts to provide Licensee with feedback regarding the Software
Title and modifications that must be made prior to approval of the
Certification submission. Provided that Licensee has made good faith
efforts to address issues raised by Microsoft, Licensee shall be given the
opportunity to resubmit Software Titles that fail the Certification
approval process. In Microsoft's discretion, Licensee may be charged a
reasonable fee designed to offset the costs associated with the testing of
Software Titles upon resubmission. In the event of a second submission,
Microsoft reserves the right to assign a new release date for the Software
Title.
Licensee shall not distribute the Software Title, nor manufacture any
Finished Product Unit intended for distribution, unless and until Microsoft
shall have given its approval of the Certification version of the Software
Title and both parties have approved of the Finished Product Units as set
forth in section 7 of this letter.
2. Distribution License [new section].
Upon Certification of the Software Title, approval of the Marketing
Materials and the Finished Product Unit test version of the Software Title
by Microsoft and subject to the terms and conditions contained within this
Agreement and the XDK License, Microsoft grants Licensee a non-exclusive,
non-transferable, license to distribute Software Titles containing
Redistributable and Sample Code (as defined in the XDK License) and
Security Technology (as defined in the PLA) within the Territory in
Finished Product Unit form to third parties for distribution to end users
and/or directly to end users.
The license to manufacture and distribute the Software Product is
personal to Licensee and except for transfers of Finished Product U nit
through normal channels o f distribution ( e.g. wholesalers, retailers) who
will in turn transfer such product to end users, absent the written
approval of Microsoft or as otherwise permitted herein, Licensee may not
sublicense or assign its rights under this license to other parties. For
the avoidance of doubt, Licensee may not sublicense, transfer or assign its
right to manufacture and distribute Software Titles or Finished Product
Unit to another entity (a "Sub-publisher") that will brand, co-brand or
otherwise assume control over such products as a "publisher" as that
concept is typically understood in the console game industry, except under
the following conditions: (1) the Sub-publisher has signed a PLA and both
Licensee and Sub-publisher are and remain at all times in good standing
under each of their respective PLAs; (2) each Software Title over which
Sub-publisher acquires publishing rights shall be deemed a "Software Title"
for purposes of both Licensee's and Sub-publisher's PLAs, and Microsoft
shall have full right and authority to enforce its rights with respect to
the Software Title(s) against either or both Licensee and Sub-publisher;
(3) Licensee shall be responsible for making applicable royalty payments
for the FPUs for which it places manufacturing orders, and Sub-publisher
shall be responsible for making royalty payments for the FPUs for which it
places manufacturing orders; provided that Licensee shall be liable to
Microsoft for any failure by Sub-publisher to make royalty payments or
otherwise comply with the duties and obligations under the PLA; (4) the
royalty table set forth in Section 6.1 of the PLA shall apply to FPUs on an
aggregate basis, regardless of whether Licensee or Sub-publisher is
responsible for the manufacturing and royalty payments therefore, and
Microsoft shall be entitled to share manufacturing information relating to
the Software Title(s) among both Licensee and Sub-publisher in furtherance
of this
subsection (4); and (5) Microsoft's receipt, upon the earlier of (i) the
effective date of the sub-publication agreement between Licensee and
Sub-publisher, or (ii) sixty (60) days prior to Sub-publisher's
commencement of manufacturing of any Software Title(s), of written notice
of the sub-publishing relationship, which notice shall also include
confirmation by Licensee that the foregoing conditions have been met, along
with a summary of the scope and nature of the sub-publishing relationship
with Sub-publisher including, without limitation, as between Licensee and
Sub-publisher, which party will be responsible for Certification of the
Software Title(s), a list of the Software Title(s) for which Sub-publisher
has acquired publishing rights, the Territory(ies) for which such rights
were granted, and the term of Licensee's agreement with Sub-publisher.
3. Changes to the Xbox Guide. The following shall replace Section 2.5 of the
PLA:
Licensee acknowledges that the Xbox Guide is an evolving document and
subject to change during the Term of this Agreement. Notwithstanding the
prospect of such change, Microsoft agrees that except in circumstances
where (a) such change is deemed vitally important to the success of the
Xbox platform (e.g. changes due to piracy, technical failure) or (b) such
change will not add significant expense to the Software Title's
development, then (i) after completion of the Pre-Certification by
Microsoft, Licensee will not be obligated to comply, with respect to such
Software Title only, with any subsequent changes made by Microsoft to the
technical or content requirements for Software Titles in the Xbox Guide;
and (ii) subject to the immediately preceding clause any changes made by
Microsoft in Branding Specifications or other Marketing Materials
requirements after final Certification of a Software Title by Microsoft
will be effective as to such Software Title only on a "going forward" basis
(i.e., only to such Marketing Materials and/or Finished Product Units as
are manufactured after Microsoft notifies Licensee of the change).
Notwithstanding the foregoing (i) and (ii), Licensee shall comply with such
changes to the Xbox Guide in the event Microsoft agrees to pay for
Licensee's direct, out-of-pocket expenses necessarily incurred as a result
of its retrospective compliance with the change.
4. Game Demos. We would also like to take this opportunity to clarify
submission and approval processes for demos. This section 4 shall replace
the definition of "Demo Finished Product Unit" in Section 6.1 of the PLA:
For purposes of the PLA, "Demo Versions" means a small portion of an
applicable Software Title that is provided to end users to advertise or
promote a Software Title. Subject to the terms of the Xbox Guide, a Demo
Version(s) may be distributed on Finished Product Units for other Software
Titles. Additionally a Demo Version may be placed on a single Finished
Product Unit either as a stand-alone or with other Demo Versions for
distribution to end users, provided that Microsoft shall have prior
approval over the number of units manufactured and the price of such units
shall be free or at a suggested retail price not to exceed ***. Unless
separately addressed in the Xbox Guide, all rights, obligations and
approvals set forth in this Agreement as applying to Software Titles shall
separately apply to its Demo Version. Demo Versions may not be distributed
by Licensee until granted Certification approval by Microsoft.
5. Content Rating. There has been some confusion about content rating
requirements in Territories lacking a content rating body or authority. To be
clear, for Territories that do not utilize a content rating system (e.g. Japan),
Microsoft shall not approve any Software Title that, in its opinion, contains
excessive sexual content or violence, inappropriate language or other elements
deemed unsuitable for the Xbox console platform. This section 5 shall supplement
Section 2.2 of the PLA.
6. EULA and End User Rights. There have been questions about whether there
will be a EULA requirement for Software Titles. There is no such requirement at
this time; accordingly, this section 6 shall replace Section 3.2 of the PLA:
[*] Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
***
7. Manufacturing Processes. By now you should have received detailed
instructions about the manufacturing process and requirements for working with
Authorized Replicators in the Operations section of the Xbox Guide. Upon review,
you may have noted several additional requirements that had not been originally
specified in your PLA. These new requirements, which shall supplement Section 4
of the PLA are as follows:
o Licensee shall cause the Authorized Replicator to create several test
versions of Finished Product Units ("Verification Version(s)") that
shall be provided to both Microsoft and Licensee for evaluation. Prior
to full manufacture of Finished Product Units by the Authorized
Replicator, both parties shall have approved of the Verification
Version. Microsoft's approval shall be a condition precedent to
manufacture, however Licensee shall grant the final approval and shall
work directly with the Authorized Replicator regarding the production
run. Licensee agrees that all Finished Product Units must be
replicated in conformity with all of the quality standards and
manufacturing specifications, policies and procedures that Microsoft
requires of its Authorized Replicators, and that all so-called
"adders" must be approved by Microsoft prior to packaging (in
accordance with Section 2.3.4 of the PLA).
o Throughout the manufacturing process and upon the request of
Microsoft, Licensee shall cause the Authorized Replicator to provide
additional Verification Versions of the Finished Product Units for
evaluation by Microsoft. o A so-called break-the-seal or "BTS" label
will be issued to the Authorized Replicator for placement on Finished
Product Unit packaging materials as further specified in the Xbox
Guide. A BTS label shall be assigned to each Finished Product Unit
that has been manufactured by the Authorized Replicator.
o Licensee is required to use an Authorized Replicator for manufacture
of Finished Product Units but may, solely with respect to Finished
Product Units manufactured for publication in the Territory comprising
Europe, utilize a different process or company for the combination of
Finished Product Units with Packaging Materials provided that such
packaging process incorporates the BTS label and otherwise complies
with the Xbox Guide. Licensee shall notify Microsoft regarding its use
of such process or company so that the parties may properly coordinate
their activities and approvals. To the extent that Microsoft is unable
to accommodate such processes or company, Licensee shall modify its
operations to comply with Microsoft's requirements.
o For purposes of assisting in the scheduling of manufacturing
resources, monthly, or as otherwise requested by Microsoft in its
reasonable discretion, Licensee shall provide Microsoft with monthly
sales forecasts showing sales projections twelve to eighteen months
out for Finished Product Units.
[*] Confidential Portion omitted and filed separately with the Securities and
Exchange Commission.
o Licensee acknowledges that Microsoft may charge the Authorized
Replicator fees for rights, services or products associated with the
manufacture of Finished Product Units and that the agreement with the
Authorized Replicator grants Microsoft the right to instruct the
Authorized Replicator to cease the manufacture of Finished Product
Units and/or prohibit the release of Finished Product Units to
Licensee or its agents in the event Licensee is in breach of this
Agreement or any credit agreement (the "Credit Agreement") entered
into by the parties.
8. Currency Conversion Ratio. For purposes of Section 6.2 of the PLA, the
currency conversion ratios set forth on Reuters.com (as of 4:00 p.m. London,
England time) shall replace the ratios set forth in the US edition of the Wall
Street Journal.
9. Royalty Payment Process. Microsoft has implemented a change in the royalty
payment process of which you should all be aware by now. Accordingly, the
following shall replace Section 6.3 of the PLA:
Licensee shall be required to pre-pay all royalties owed to Microsoft
for the planned manufacture of Finished Product Units by its Authorized
Replicator. Licensee shall not authorize its Authorized Replicators to
begin production until such time as Microsoft has verified with the
Authorized Replicator and Licensee that such funds have been received and
deposited. Depending upon Licensee's credit worthiness, Microsoft may, but
shall not be obligated to, offer Licensee net thirty (30) credit terms for
the payment of royalties due under this Agreement. All payments shall be
made by wire transfer only, in accordance with the payment instructions set
forth in the Xbox Guide.
10. Confidentiality. The following shall replace Section 7.1 of the PLA:
The information, materials and software exchanged by the parties
hereunder or under an XDK License, including the terms and conditions
hereof and of the XDK License, shall be subject to the Non-Disclosure
Agreement between the parties attached hereto and incorporated herein by
reference as Exhibit D; provided, however, that for purposes of the
foregoing Section 2(a)(i) of the Non-Disclosure Agreement shall hereinafter
read, "[The Receiving Party shall; (i)] Refrain from disclosing
Confidential Information of the Disclosing Party to any third parties for
as long as such remains undisclosed under 1(b) above except as expressly
provided in Sections 2(b) and 2(c) of this [Non-Disclosure] Agreement." In
this way, all Confidential Information provided hereunder or by way of the
XDK License in whatever form (e.g. information, materials, tools and/or
software exchanged by the parties hereunder or under an XDK License),
including the terms and conditions hereof and of the XDK License, unless
otherwise specifically stated, shall be protected from disclosure for as
long as it remains Confidential.
11. Open Source Software [new section]. We have been fielding questions,
primarily at the developer level, about the use of open source software in
connection with the development of Xbox games. As you are surely aware, some
open source licenses, the GNU General Public License i n particular, purport t o
grant all third parties a license to any larger work that uses code covered by
that open source license. This puts the protection of not only Microsoft code,
but also your game code, at risk. As such, the PLA shall be amended as follows:
Licensee's rights set forth in the PLA are conditioned upon Licensee
(a) not incorporating Identified Open Source Software (as defined below)
into or combining Identified Open Source Software with the Software Title;
(b) not distributing Identified Open Source Software in conjunction with
the Software Title; and (c) not using Identified Open Source Software in
the development of the Software Title. "Identified Open Source Software"
means software which is licensed pursuant to terms that (i) create, or
purport to create, obligations for
Microsoft with respect to the Software Title or (ii) grant, or purport to
grant, to any third party any rights or immunities under Microsoft's
intellectual property or proprietary rights in the Software Title.
Identified Open Source Software includes, without limitation, any software
that requires as a condition of use, modification and/or distribution of
such software that other software incorporated into, derived from or
distributed with such software be (a) disclosed or distributed in source
code form; (b) be licensed for the purpose of making derivative works; or
(c) be redistributable at no charge. Licensee warrants and represents that
it shall not (a) incorporate Identified Open Source Software into or
combine Identified Open Source Software with the Software Title; (b)
distribute Identified Open Source Software in conjunction with the Software
Title; and (c) use Identified Open Source Software in the development of
the Software Title.
12. European Publication [new section]. As we understand that you may desire to
develop Xbox games for the European market, the two European approval options
described below will apply to you, and the PLA shall be amended as set forth
below. Note that given the necessity of Microsoft's granting approval over
Concept, Pre-Certification and Marketing Materials during the initial launch
phase of Xbox to ensure the success of the platform, the "EU Approval Option"
shall not be available until one year following the initial launch of Xbox in
Europe (the "Anniversary Date").
As of the first day following the Anniversary Date and solely in
connection with the distribution of European Finished Product Units,
Licensee may choose either of the following options for the treatment of
the European Finished Product Unit. For purposes of this letter, "European
Finished Product Units" are Finished Product Units that Licensee intends to
distribute and/or distributes in the Territory comprising Europe. For the
avoidance of doubt, Finished Product Units that are identical to European
Finished Products but distributed in Territories other than Europe, are not
European Finished Product Units.
Option 1: Standard Approval. Licensee shall comply with all terms,
obligations and requirements of the PLA. Licensee shall notify Microsoft in
advance of development regarding its intent to comply with this option
which shall hereafter be referred to as the Standard Approval process.
Option 2: EU Approval. At any time during a Software Title's
development prior to manufacture by an Authorized Replicator, Licensee may
choose to not submit its Software Title to Microsoft for Concept approval
(Section 2.1 of the PLA), Pre-Certification (described above in section 1
(one) of this letter) and Art & Marketing Materials approval (Sections
2.1.6 and 5.2 of the PLA). Notwithstanding the foregoing, Licensee shall be
required to submit the Software Title to Microsoft for Certification
approval (described above in section 1 of this letter) and shall comply
with the Content Rating requirements (Section 2.2 of the PLA and amended by
section 5 of this letter). Collectively, this option shall be referred to
herein as the EU Approval Option. Additional information regarding this
option shall be set forth shortly in the Xbox Guide.
In the event Licensee chooses the EU Approval Option, Licensee shall
not use the Licensed Trademarks on the European FPU and therefore the
license grant set forth in Section 3.1 of the PLA is withdrawn as to such
European Finished Product Units. In addition, Licensee shall make no
statements in advertising, marketing materials, packaging, websites or
otherwise that the European FPU is approved or otherwise sanctioned by
Microsoft or is an official Xbox Software Title.
In the event the European Finished Product Units fail Certification
approval, Licensee may resubmit such titles consistent with the terms of
the PLA or the Xbox Guide, but under no circumstances shall Licensee
manufacture or Commercially Release the European FPU until such time as
they have passed Certification approval.
In the event Licensee chooses the EU Approval Option but subsequently
chooses the Standard Approval Option, Licensee shall be required to comply
with all terms of the Agreement
concerning approvals and the release of the European Finished Product Units
as deemed relevant by Microsoft.
In the event Licensee requests distribution of the European Finished
Product Units in Territories other than Europe, Licensee shall be required
to comply with all terms of the PLA concerning approvals and the release of
the Finished Product Units as deemed relevant by Microsoft.
Notwithstanding Licensee's choice of the EU Approval Option, all other
portions of the Agreement other than those specifically identified above as
no longer governing Licensee's distribution of the European Finished
Product Units shall remain in effect, including, but not limited to,
Licensee's obligation to pay royalties, use a Microsoft approved Authorized
Replicator, warranty and indemnity obligations and Term.
An additional copy of this letter amendment is enclosed. Please arrange for an
authorized representative of your company to sign and date both copies of this
letter in the space provided below, and return to Microsoft Licensing, Inc.,
attention Xbox Publisher Accounting Services, 6100 Neil Road, Suite 100, Reno,
Nevada 89511-1137. Upon receipt, MSLI will countersign this letter and return
one fully-executed letter to you for your files. Thank you for your attention to
this matter.
Sincerely,
/s/ John Smith
--------------------
Xbox Account Manager
Accepted and agreed:
Activision Publishing, Inc. Microsoft Licensing, Inc.
- ------------------------------------
Publisher Name
/s/ George L. Rose /s/ Brian Russell
- ------------------------------------ ---------------------------------
By (sign) By (sign)
GEORGE L. ROSE BRIAN RUSSELL
- ------------------------------------ ---------------------------------
Name (Print) Name (Print)
Sr. Vice President & General Counsel OEM Accounting Manager
- ------------------------------------ ---------------------------------
Title Title
4/16/02 4/19/02
- ------------------------------------ ---------------------------------
Date Date