Exhibit 10.7
XBOX(TM) LIVE DISTRIBUTION AMENDMENT
TO THE
XBOX(TM) PUBLISHER LICENSING AGREEMENT
This Xbox(TM) Live Distribution Amendment (the "Amendment") is entered into and
effective as of the latter of the two signature dates below (the "Effective
Date") by and between MICROSOFT LICENSING, INC. a Nevada corporation
("Microsoft"), and ACTIVISION PUBLISHING, INC., as successor in interest to
ACTIVISION, INC. ("Licensee"), and supplements the Xbox(TM) Publisher License
Agreement between the parties dated as of July 18, 2001 ("PLA").
RECITALS
A. Whereas, Microsoft and its affiliated companies develop and license a
computer game system, known as the Xbox(TM) game system; and
B. Whereas, Microsoft and its affiliated companies intend to develop and
maintain a proprietary online service accessible via the Xbox(TM) game system;
and
C. Whereas, Licensee is an experienced publisher of software products and
is developing and publishing one or more software products to run on the
Xbox(TM) game system pursuant the parties' PLA; and
D. Whereas, Licensee wishes to participate in the Xbox Live service by
making such software products available to subscribers of such service.
Accordingly, for and in consideration of the mutual covenants and conditions
contained herein, and for other good and valuable consideration, receipt of
which each party hereby acknowledges, Microsoft and Licensee agree as follows:
1. DEFINITIONS; INTERPRETATION
1.1 Except as expressly provided otherwise in this Amendment, capitalized
terms shall have the same meanings ascribed to them in the PLA.
1.2 The terms of the PLA are incorporated by reference, and except and to
the extent expressly modified by this Amendment, the PLA shall remain in full
force and effect and is hereby ratified and confirmed.
1.3 "Xbox Live" shall mean the proprietary online service offered by
Microsoft to End Users. The Xbox Live service may change from time to time, and
may include, without limitation, the Base Service and Premium Service(s).
1.4 "Online Features" shall mean a Software Title's content, features and
services that will be available to End Users via Xbox Live. Online Features may
be Base Online Features and/or Premium Online Features.
1.5 "Base Service" shall mean a base level of Xbox Live services available
to End Users for a fee payable to Microsoft or its affiliates. The Base Service,
and the terms and conditions for Licensee's Base Online Features, is further
defined in this Amendment and the Xbox Guide.
1.6 "Base Online Features" shall mean a Software Title's Online Features
that are available to End Users as part of the Base Service.
1.7 "Premium Service(s)" shall mean Xbox Live services (other than the Base
Service) available to End Users for additional fee(s) above and beyond the Base
Service fee. The Premium Service, and the terms and conditions for Licensee's
Premium Online Features, is further defined in this Amendment and the Xbox
Guide.
CONFIDENTIAL
1.8 "Premium Online Features" shall mean a Software Title's Online Features
that are available to End Users as part of the Premium Service.
1.9 "End User" shall mean any individual or entity that accesses and uses
Xbox Live, whether as a guest of a Subscriber, via a user account established by
a Subscriber, or otherwise.
1.10 "Subscriber" shall mean an end user that establishes a subscription
billing account to Xbox Live.
1.11 "Commercial Release" shall mean (a) with respect to Xbox, the first
commercial availability of Xbox Live in the United States to the general public,
and (b) with respect to a the Online Features of a Software Title, the first
availability of such features via Xbox Live to the general public.
1.12 "Trial Version" shall mean a time-limited or feature-limited version
of a Software Title's Online Features that is available End Users only to
advertise or promote the applicable Software Title, and is further defined in
this Amendment and the Xbox Guide.
1.13 "Online Territory" shall be determined on an Online Feature-by-Online
Feature basis, and shall mean such geographic regions or countries as may
specified in writing when the Concept of the applicable Online Feature is
approved. The Online Territories for Online Features of a Software Title may
differ in scope from the Territories for the Software Title's Finished Product
Units.
2. DEVELOPMENT; DELIVERY; APPROVAL
2.1 Development Support. Microsoft shall provide Licensee a reasonable
level of support in connection with the development and testing of Licensee's
Online Features in a manner consistent with the guidelines and requirements set
forth in the Xbox Guide.
2.2 Approval Process. The approval process for Online Features is as set
forth in the PLA (i.e., the stages for Concept approval, pre-Certification,
Certification and Marketing Materials shall apply to all aspects of the Software
Title, including without limitation, its Online Features). Additional approval
criteria specific to Online Features are as set forth below and in the Xbox
Guide.
2.2.1 Concept. Licensee's Concept submission form shall include a
description of the Online Features, including, without limitation, a description
of any incremental content (i.e., to be made available following the Commercial
Release of the Finished Product Units of the Software Title) and proposed
distribution schedule. Licensee shall designate, in its sole discretion, which
Online Features shall be included in the Base Service and in the Premium
Service. Subject to the foregoing, Microsoft may require that all Online Feature
Concept submissions include, at a minimum, certain basic functionality necessary
to achieve certification (e.g., all features must support user authentication),
and any such requirements shall be set forth in the Xbox Guide. Licensee may
additionally propose Online Features at any time after a Software Title Concept
has been approved, in which case Licensee shall deliver to Microsoft a separate
Concept submission addendum form for each Online Feature proposal. Evaluation of
the proposed Online Features will be based on criteria including, but not
limited to, the criteria set forth in the Xbox Guide. To the extent Licensee
desires that Online Features be available in the Territory comprising European
Union countries, the EU Approval Option shall not apply.
2.2.2 Client-Server Games. The Online Features of certain Software Titles
may require that all or part of the Online Features be hosted on game server(s)
("Game Servers"). Such Game Servers shall be maintained and operated by
Microsoft unless Licensee desires to maintain and operate its own game server(s)
for Premium Online Services ("Licensee Game Servers"), in which case Licensee
Game Servers must be Certified in accordance with Section 2.2.5 below.
Notwithstanding the foregoing, given the necessity of creating a secure and
reliable online service to ensure the success of the Xbox Live platform, the
option for Licensee to maintain and operate its own Licensee Game Servers may
not be available until at least one year following the Online Commercial Release
of Xbox Live. All maintenance and operation of Game Servers, if any, for Base
Online Features shall be conducted solely by Microsoft.
2.2.3 Pre-Certification. At the Pre-Certification submission, Licensee
shall deliver to Microsoft a version of the Online Features, and such other
content as may be required by the Xbox Guide. Microsoft shall also conduct
certain testing of the Online Features, which may vary depending on the nature
of the Online Features. If applicable, Licensee shall also provide access to
Licensee Game Servers and/or the Game Server software for Pre-Certification
testing in
2 CONFIDENTIAL
accordance with the Xbox Guide. Online Features must receive satisfactory
Pre-Certification testing results prior to the Software Title proceeding to Beta
Trials.
As set forth in the PLA, all feedback provided by Microsoft to Licensee as a
result of Microsoft's Pre-Certification testing shall be advisory in nature.
However, Licensee acknowledges that the Pre-Certification and Certification
submissions evaluate different aspects of the Online Features and at different
stages in Licensee's development schedule and therefore satisfactory feedback
regarding Pre-Certification is not an indication that the Online Features will
be approved following the Certification submission. Licensee shall be given the
opportunity to resubmit Online Features that fail the Pre-Certification approval
process. In Microsoft's discretion, Licensee may be charged a reasonable fee
designed to offset the costs associated with the Pre-Certification testing of
Software Titles in the event of resubmission(s).
2.2.4 Beta Trials. If the Pre-Certification submission receives
satisfactory results, Microsoft may require that internal and public beta
testing be conducted by or on behalf of Microsoft (the "Beta Trials"). All
feedback provided by Microsoft to Licensee as a result of the Beta Trials shall
be advisory in nature, and satisfactory feedback from the Beta Trials is not an
indication that the Online Features will be approved following the Certification
submission. Likewise, Beta Trial feedback may include information regarding
violations of Technical Certification Requirements that could, if not addressed
by Licensee, result in Certification failure. The Beta Trial process shall be as
further described in the Xbox Guide.
2.2.5 Certification. In addition to the deliverables set forth in the PLA,
Licensee shall deliver to Microsoft a proposed final release version of the
Software Title with Online Features that is complete and ready for access via
Xbox Live, in addition to such other content as may be required by the Xbox
Guide. Such version shall provide the final content rating certification and
with all identified program errors corrected. If applicable, Licensee shall also
provide Microsoft access to Licensee's Game Servers and Game Server software.
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. As set forth in the Xbox
Guide, Certification Testing may vary depending on the nature of the Online
Features (e.g., a series of episodic downloads for a client-to-client game may
have different Certification criteria and testing times than the features of a
multiplayer client-server game).
2.2.5.1 Certification for Online Features may be conditioned upon (1)
successful completion of the Certification Testing; (2) conformance with the
approved Online Feature Concept as identified in the Concept Summary; (3)
demonstration of conformance with the Technical Certification Requirements as
described in the Xbox Guide; (4) consistency with the goals and objectives of
the Xbox Live service; and (5) continuing and ongoing compliance with all
Certification requirements and other requirements as set forth in the Xbox Guide
and this Amendment.
2.2.5.2 Certification for Licensee Game Servers may be conditioned upon:
(1) successful completion of the Certification Testing, (2) demonstration of
conformance with the Service Level Requirements as described in the Xbox Guide,
and (3) continuing and ongoing compliance with all Certification requirements,
Service Level Requirements, and other requirements as set forth in the Xbox
Guide and this Amendment.
2.2.5.3 If warranted on the basis of its tests, Microsoft shall make
reasonable efforts to provide Licensee with feedback regarding the Online
Features and Licensee Game Servers 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 Online Features and Licensee Game Servers 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 Online Features and Licensee Game Servers upon resubmission.
2.2.6 Post-Release Compliance. As set forth in Section 2.2.5 above, Online
Features (and Licensee Game Servers, as applicable) must remain in compliance
with all Certification requirements on a continuing and ongoing basis. If,
following Certification and Commercial Release, the Online Features thereafter
fail at any time to comply with any of the Certification criteria set forth
herein, Microsoft reserves the right, at its option, to terminate this Amendment
with respect to such Online Features, or to revoke Certification and suspend the
availability of such Online Features in whole or in part until such time that
such Online Features are re-Certified in accordance with Section 2.2.5.
Re-Certification may be conditioned upon Licensee's delivery to Microsoft of
Auto-Updates (as defined in Section 2.3.4) in accordance with and within the
time frames set forth in the Xbox Guide. If Licensee Game Servers fail at any
time to comply with any of the Certification criteria set forth herein,
Microsoft reserves the right, at its option, to suspend Licensee's maintenance
and operation of such Licensee Game Servers until such time that such Licensee
Game Servers achieve Certification again and/or terminate Licensee's right to
maintain and operate Licensee Game Servers; and during such period of
noncompliance
3 CONFIDENTIAL
Microsoft further reserves the right to host, at Licensee's cost and expense,
the Online Features on its own Game Servers, and Licensee shall cooperate as
requested by Microsoft in effecting a smooth and prompt transition of the Online
Features from Licensee Game Servers to Microsoft's Game Servers.
2.3 Other Approval Considerations.
2.3.1 Other Versions. The parties may mutually agree that Licensee submit
versions of the Online Features or Licensee Game Servers at stages of
development other than as identified above for review and feedback by Microsoft.
Such review shall be within the discretion of Microsoft and may require the
payment of processing fees by Licensee to offset the costs associated with the
review of such Software Titles.
2.3.2 Content Rating. The content rating requirements set forth in the PLA
shall apply to all Online Features. Additionally, Microsoft may require that
Licensee obtain, at Licensee's sole cost, an ESRBi rating (or comparable online
content rating, if any, for the applicable Territory) consistent with and no
higher than the Software Title's ESRB rating (or other applicable rating).
Licensee shall immediately notify Microsoft in writing if at any time after
final Certification Licensee's Online Features fall out of compliance with this
Section and/or the applicable rating body guidelines for online content.
2.3.3 Changes of Requirements by Microsoft. Licensee acknowledges that the
Xbox Live service is a new and evolving network environment, and as a result, it
and the Xbox Guide are subject to change during the Term of this Amendment.
Notwithstanding Microsoft's Certification of Online Features and/or Licensee
Game Servers, nothing herein shall be deemed to relieve Licensee of its
obligation to correct material program bugs and errors in conformance with the
Xbox Guide, whenever discovered (including without limitation after Commercial
Release of the Online Features), and Licensee agrees to correct such material
bugs and errors as soon as possible after discovery, regardless of whether the
bug or error necessitates a correction to Finished Product Units or Licensee
Game Servers. Microsoft will make commercially reasonable efforts to promptly
notify Licensee of any changes to the Xbox Guide, and the time frames for
implementing changes to its Online Features and/or Licensee Game Servers to
comply with the updated requirements of the Xbox Guide.
2.3.4 Post-Release Updates. Licensee understands that certain changes to
the Xbox Guide, or the revocation of Certification with respect to Online
Features or Licensee Game Servers, may require that Licensee develop and make
available for download to End Users or to Microsoft various updates, upgrades,
or fixes thereto (collectively, "Auto-Updates"). Microsoft reserves the right to
charge Licensee a reasonable fee to offset the costs associated with the
Certification, hosting and distribution of Auto-Updates to End Users; however,
no fees shall be charged for the first two Auto Updates (if any) per Software
Title. In addition, Licensee may desire, from time to time, to make available
additional Online Features in the form of software downloads (such as new
characters or game levels) or data (such as league statistics), as part of the
Base Service or Premium Service ("Content Downloads"). Auto Updates and Content
Downloads shall be referred to collectively herein as "Updates." Updates of any
nature must be approved by Microsoft in advance and must achieve Certification;
however, the Certification process and requirements may vary depending on the
nature of and necessity for the Update, as further described in the Xbox Guide.
2.3.5 Event-Based Premium Online Features. Certain event-based Premium
Online Features (e.g., pay-for-play tournaments and contests) may require
additional approvals and be subject to additional requirements, which will be
set forth in the Xbox Guide.
3. OTHER RIGHTS AND RESPONSIBILITIES
3.1 Licensee.
3.1.1 Archive Copies. Licensee agrees to maintain, and to possess the
ability to support, copies in object code, source code and symbol format, of all
Online Features and Updates available to End Users during the Term of this
Amendment ***.
3.1.2 Customer Support. As set forth in the PLA and the Xbox Guide, as
between Microsoft and Licensee, Licensee shall be solely responsible for
providing customer support to End Users of Online Features. Licensee will
provide all End Users appropriate contact information (including without
limitation Licensee's street address and telephone number, and the applicable
individual/group responsible for customer support), and will also provide all
such information to Microsoft for posting on http://www.xbox.com. Customer
support shall at all times conform to the Customer Service Requirements set
forth in the Xbox Guide. Microsoft shall be responsible for providing technical
support to End Users relating to the Xbox Live service platform, and unless the
parties agree otherwise, shall be responsible for all community
[*] Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
4 CONFIDENTIAL
management functions. Except as expressly set forth herein, Licensee
acknowledges and agrees that Microsoft will have no support responsibilities
whatsoever to End Users of the Online Features, regardless of whether Microsoft
hosts Game Servers, Updates, or otherwise.
3.1.3 No Reverse Engineering. Licensee shall not, directly or indirectly,
reverse engineer or aid or assist in the reverse engineering of all or any part
of Xbox Live or any associated hardware and software except and only to the
extent that such activity is expressly permitted by applicable law
notwithstanding this limitation. In the event applicable law grants Licensee the
right to reverse engineer the Xbox notwithstanding this limitation, Licensee
shall provide Microsoft with written notice prior to such reverse engineering
activity, information sufficient regarding Licensee's intended method of reverse
engineering, its purpose and the legal authority for such activity and shall
afford Microsoft a reasonable period of time before initiating such activity in
order to evaluate the activity and/or challenge the reverse engineering activity
with the appropriate legal authorities. Licensee shall refrain from such reverse
engineering activity until such time as any legal challenge is resolved in
Licensee's favor. Reverse engineering includes, without limitation, decompiling,
disassembly, sniffing, peeling semiconductor components, or otherwise deriving
source code.
3.1.4 End User Rights. Use of Xbox Live by End Users shall be subject to a
Terms of Use, which may be amended from time to time. Licensee may impose
additional terms and restrictions on End Users with respect to Licensee's Online
Features to the extent such additional terms and restrictions are not
inconsistent with the Terms of Use and are in a form to be approved by
Microsoft.
3.1.5 Availability of Online Features.
3.1.5.1 Minimum Commitment. Subject to the commercial availability of
Xbox Live, Licensee agrees that each Online Feature of a Software Title
shall be made available for inclusion in Xbox Live for a minimum of ***
following the respective Commercial Release of the Finished Product Units
of such Software Title in each Online Territory of (the "Minimum
Commitment"), and Licensee shall be obligated to provide all necessary
support (including, without limitation, the obligations set forth in
Sections 2.3.3, 2.3.4, 3.1.2) for such Online Feature during the Minimum
Commitment. Subject to the foregoing, the parties may mutually agree on a
case-by-case basis to a shorter Minimum Commitment as appropriate.
Following the Minimum Commitment, Licensee may terminate Microsoft's
license (as defined in Section 4 below) associated with such Online
Features upon *** prior written notice to Microsoft; and/or Microsoft may
discontinue the availability of any or all such Online Features via Xbox
Live upon *** prior written notice to Licensee. Licensee shall be
responsible for communicating the duration of Online Feature availability
to End Users, and for providing reasonable advance notice to End Users of
any discontinuation of Online Features.
3.1.5.2 Reclassification of Base and Premium Online Features. If, following
the Minimum Commitment for a Base Online Feature, Licensee desires that the Base
Online Feature continue to be made available via Xbox Live, then Licensee may,
at its option and upon written notice to Microsoft at least *** prior to the end
of the Minimum Commitment, elect to ***.
3.1.5.3 Microsoft shall have no responsibility, and shall not be liable in
any way, for any statements or claims made by Licensee, whether in Licensee's
Marketing Materials or otherwise, regarding the availability of any Online
Features.
3.1.6 As soon as possible following its request, Licensee shall provide
Microsoft with up to *** Finished Product Units and accompanying Marketing
Materials at Licensee's cost. Such units may be used in marketing, as product
samples and for support and archival purposes, and shall be in addition to
the Finished Product Units provided for these purposes pursuant to the PLA.
3.1.7 Trademarks. To the extent a Software Title's Online Features consist
solely of Content Download(s) and such Software Title does not support online
multiplayer gameplay via Xbox Live (a "Download-Only Software Title"), such
Download-Only Software Title and associated Marketing Materials may not use the
Licensed Trademarks or packaging templates associated with Xbox Live, and
Licensee may not refer to such Download-Only Software Title as an "Xbox
Live-enabled" Software Title. Notwithstanding the foregoing, Section 4.1 of the
PLA shall apply to all other Software Titles which support online multiplayer
gameplay via Xbox Live, and Licensed Trademarks and packaging templates specific
to Xbox Live-enabled Software Titles shall be available for use in connection
therewith.
[*] Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
5 CONFIDENTIAL
3.2 Microsoft.
3.2.1 sUage Data. Licensee acknowledges that the operation of the Xbox Live
service requires that Microsoft collect and store End User usage data,
including, without limitation, End User statistics, scores, ratings, and
rankings (collectively, "Aggregate Usage Data"), as well as
personally-identifiable End User data (e.g., name, email address) ("Personal
Data"). Microsoft reserves the right, in its discretion, to use such Aggregate
Usage Data for any purpose, including without limitation, posting the Aggregate
Usage Data on Xbox.com or other Microsoft websites. Microsoft agrees to use
commercially reasonable efforts to periodically make certain Aggregate Usage
Data and Personal Data available to Licensee; provided that Licensee's use of
such data shall be in accordance with the then-current Xbox Live Privacy
Statement and such other reasonable restrictions as Microsoft may require.
Without limiting the foregoing, Licensee agrees that any disclosure of Personal
Data to Licensee shall only be used by Licensee and may not be shared with any
other third parties, and any permitted email communications with End Users shall
include instructions for opting out of receiving any further communications from
Licensee.
3.2.2 Billing and Collection. Microsoft shall be responsible for customer
billing and collecting all subscription fees associated with Xbox Live,
including without limitation Base Service and Premium Service fees. Microsoft
shall have sole discretion to determine the fees charged for the Base and
Premium Services.
4. GRANT OF LICENSE
4.1 In consideration of the royalty payments as described in Section 5.1.2
below, Licensee grants to Microsoft an worldwide, transferable, sublicensable
license to broadcast, transmit, distribute, host, publicly display, reproduce,
and license (solely to End Users) Online Features solely to the extent necessary
to enable End Users to use the Online Features via Xbox Live, and additionally,
a worldwide, transferable license solely to distribute to End Users and permit
End Users to download and store Updates, solely in conjunction with such End
User's use of the Online Features via Xbox Live.
4.2 Licensee agrees that the license grant set forth in this Section 4 is
exclusive, meaning that Licensee shall not directly or indirectly permit or
enable access to Online Features by any means, methods, platforms or services
other than Xbox and Xbox Live. Notwithstanding the foregoing, and absent any
separate agreement between the parties to the contrary, this Section 4 shall not
prevent Licensee from making other platform versions of its Software Titles
available via other platform-specific online services. For illustration
purposes, Licensee may make both Xbox and Playstation2 versions of a Software
Title that supports online gameplay, but the Xbox version may only be played via
the Xbox Live service and no other online service operated by any entity other
than Microsoft.
4.3 This Section 4 shall survive expiration or termination of this
Amendment solely to the extent and for the duration necessary to effectuate
Section 6.3 below.
5. PAYMENTS
5.1 Premium Online Features.
5.1.1 Set-Up, Hosting and Bandwidth Fees. If Microsoft hosts Game Servers
for a Software Title's Premium Online Features, Licensee shall pay the
applicable Set-Up Fees, Hosting Fees, and Bandwidth Fees as such terms are
defined and detailed in the Xbox Guide.
5.1.2 Royalty. Microsoft shall pay Licensee a *** royalty for Premium
Online Features (the "Royalty Fee"). The Royalty Fee shall be calculated on Net
Receipts received from Premium Online Features, where "Net Receipts" is defined
as all revenues generated by Licensee's Premium Online Features at the greater
of the Licensee's suggested Premium Online Feature price or the actual Premium
Online Feature price. The actual price does not include any pass-through taxes
such as sale, use, and/or VAT/GST which are ordinarily collected from End Users
whether or not those taxes are displayed to End Users.
[*] Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
6 CONFIDENTIAL
5.2 Base Online Features. ***
5.3 Payment Process. All payments due by either party shall be remitted in
US dollars, and in accordance with the processes set forth herein.
5.3.1 Hosting and Bandwidth Fees. Microsoft will invoice Licensee on a
calendar quarterly basis for any Set-Up Fees, Hosting Fees, and/or Bandwidth
Fees owed to Microsoft. Licensee shall pay to Microsoft the full amount invoiced
within thirty (30) calendar days after the date of the respective invoice.
Payment will be made by wire transfer, in immediately available funds, to an
account, and in accordance with a reasonable procedure, to be specified in
writing by Microsoft.
5.3.2 Royalty Fees. Within thirty (30) days after the end of each calendar
quarter with respect to which Microsoft owes Licensee any Royalty Fees,
Microsoft shall furnish Licensee with a statement, together with payment for any
amount shown thereby to be due to Licensee. The statement shall be based upon
Net Receipts for the quarter then ended, and shall contain information
sufficient to discern how the Royalty Fees were computed.
5.3.3 Offset. Upon written notice, Microsoft reserves the right to offset
Hosting and Bandwidth Fees and Royalty Fees each quarter, and generate an
invoice or render payment of the balance, as appropriate.
5.4 Audit. During the Term of this Amendment *** Microsoft shall keep all
usual and proper records relating to the distribution of Licensee's Online
Features via Xbox Live, and the Net Receipts therefrom. Such records, books of
account, and entries shall be kept in accordance with generally accepted
accounting principles. Licensee may audit and/or inspect Microsoft's records in
order to verify Microsoft's compliance with the terms of this Amendment.
Licensee reserves the right, upon reasonable advance notice, to audit
Microsoft's records and consult with Microsoft's accountants for the purpose of
verifying Microsoft's compliance with the terms of this Amendment ***. Any such
audit shall be conducted during regular business hours at a single Microsoft
location in the United States with reasonable advance notice. Any such audit
shall be paid for by Licensee unless material discrepancies are disclosed.
"Material" shall mean the greater of *** or *** of the royalties due to Licensee
within the audit period. If material discrepancies are disclosed, Microsoft
agrees to pay Licensee for the costs associated with the audit, as well as
reimburse Licensee for all under-reported amounts.
5.5 Taxes.
5.5.1 The amounts to be paid by either party to the other do not include
any foreign, U.S. federal, state, local, municipal or other governmental taxes,
duties, levies, fees, excises or tariffs, arising as a result of or in
connection with the transactions contemplated under this Amendment including,
without limitation, (i) any state or local sales or use taxes or any value added
tax or business transfer tax now or hereafter imposed on the provision of any
services to the other party under this Amendment, (ii) taxes imposed or based on
or with respect to or measured by any net or gross income or receipts of either
party, (iii) any franchise taxes, taxes on doing business, gross receipts taxes
or capital stock taxes (including any minimum taxes and taxes measured by any
item of tax preference), (iv) any taxes imposed or assessed after the date upon
which this Amendment is terminated, (v) taxes based upon or imposed with
reference to either parties' real and/or personal property ownership and (vi)
any taxes similar to or in the nature of those taxes described in (i), (ii),
(iii), (iv) or (v) above, now or hereafter imposed on either party (or any third
parties with which either party is permitted to enter into agreements relating
to its undertakings hereunder) (all such amounts, together with any penalties,
interest or any additions thereto, collectively "Taxes"). Neither party is
liable for any of the other party's Taxes incurred in connection with or related
to the sale of goods and services under this Amendment, and all such Taxes shall
be the financial responsibility of the party obligated to pay such taxes as
determined by the applicable law, provided that both parties shall pay to the
other the appropriate Collected 'Taxes in accordance with subsection 5.5.2
below. Each party agrees to indemnify, defend and hold the other party harmless
from any Taxes (other than Collected Taxes) or claims, causes of action, costs
(including, without limitation, reasonable attorneys' fees) and any other
liabilities of any nature whatsoever related to such Taxes to the extent such
Taxes relate to amounts paid under this Amendment.
5.5.2 Any sales or use taxes described in 5.5.1 above that (i) are owed by
either party solely as a result of entering into this Amendment and the payment
of the fees hereunder, (ii) are required to be collected from that party under
applicable law, and (iii) are based solely upon the amounts payable under this
Amendment (such taxes the "Collected Taxes"), shall be stated separately as
applicable on payee's invoices and shall be remitted by the other party to the
payee upon request payee shall remit to the other party official tax receipts
indicating that such Collected Taxes have been collected and
[*] Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
7 CONFIDENTIAL
paid by the payee. Either party may provide the other party an exemption
certificate acceptable to the relevant taxing authority (including 'without
limitation a resale certificate) in which case payee shall not collect the taxes
covered by such certificate. Each party agrees to take such commercially
reasonable steps as are requested by the other party to minimize such Collected
Taxes in accordance with all relevant laws and to cooperate with and assist the
other party, in challenging the validity of any Collected Taxes or taxes
otherwise paid by the payor party. Each party shall indemnify and hold the other
party harmless from any Collected Taxes, penalties, interest, or additions to
tax arising from amounts paid by one party to the other under this Amendment,
that are asserted or assessed against one party to the extent such amounts
relate to amounts that are paid to or collected by one party from the other
under this section. If any taxing authority refunds any tax to a party which the
other party originally paid, or a party otherwise becomes aware that any tax was
incorrectly and/or erroneously collected from the other party, then that party
shall promptly remit to the other party an amount equal to such refund, or
incorrect collection as the case may be plus any interest thereon.
5.5.3 If taxes are required to be withheld on any amounts otherwise to be
paid by one party to the other, the paying party will deduct such taxes from the
amount otherwise owed and pay them to the appropriate taxing authority. At a
party's written request and expense, the parties will use reasonable efforts to
cooperate with and assist each other in obtaining tax certificates or other
appropriate documentation evidencing such payment, provided, however, that the
responsibility for such documentation shall remain with the payee party.
5.5.4 This Section 5.5 shall govern the treatment of all taxes arising as a
result of or in connection with this Amendment notwithstanding any other section
of this Amendment.
6. TERM AND TERMINATION
6.1 Term. The Term of this Amendment shall be as set forth in the PLA,
provided that Microsoft reserves the right to change the Fees and Royalty rates
set forth in Section 5 herein upon written notice to Licensee, but no more
frequently than once per 12 month period.
6.2 Termination for Breach. In the event either party shall materially fail
to perform or comply with this Amendment or any provision thereof, and fail to
remedy the default within *** after the receipt of notice to that effect, then
the other party shall have the right, at its sole option and upon written notice
to the defaulting party, to terminate this Amendment upon written notice;
provided that if Licensee is the party that has materially failed to perform or
comply with this Amendment, then Microsoft shall have the right, but not the
obligation, to suspend availability of the Online Features during such
fifteen-day period. Any notice of default hereunder shall be prominently labeled
"NOTICE OF DEFAULT"; provided, however, that if the default is of Sections 3.1.3
or 4.2 above, then the non-defaulting party may terminate this Amendment
immediately upon written notice, without being obligated to provide a *** cure
period. The rights and remedies provided in this Section shall not be exclusive
and are in addition to any other rights and remedies provided by law or this
Amendment or PLA. If the uncured default is related to a particular Software
Title or particular Online Features or Licensee Game Server, then the party not
in default will have the right, in its discretion, to terminate this Amendment
and/or the PLA in its entirety or with respect to the applicable Software Title
or the particular Online Features or Licensee Game Server.
6.3 Effect of Termination. Upon termination or expiration of the PLA and/or
this Amendment, Licensee shall continue to support existing Online Features
until the earlier of (1) the end of the Finished Product Unit sell-off period as
set forth in the PLA, or (2) the end of the Minimum Commitment term.
Additionally, Licensee shall continue to support any event-based Premium Online
Features which commenced prior to termination or expiration. To the extent
Licensee has support obligations pursuant to this Section 6.3 following
termination or expiration, all of Licensee's obligations under this Amendment
shall continue to apply. If this Amendment is terminated due to Licensee's
breach, then Microsoft shall have the right to immediately terminate the
availability of the Online Features and require that the operation of Licensee
Game Servers immediately cease, and all Microsoft software or materials be
immediately returned to Microsoft.
6.4 Survival. The following Sections shall survive expiration or
termination of this Amendment: 1, 3.1.2, 3.1.3, 3.2.1, 4.3, 5, 6.3, 6.4, and 7.
Other sections shall survive in accordance with their terms.
7. WARRANTIES. In addition to the warranties set forth in the PLA, Licensee
additionally warrants and represents that:
[*] Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
8 CONFIDENTIAL
7.1 Any and all information, data, logos, software or other materials
provided to Microsoft and/or made available to End Users via Xbox Live do not
and will not infringe upon or misappropriate any third party trade secrets,
copyrights, trademarks, patents, publicity, privacy or other proprietary rights;
7.2 The Online Features do not and will not contain any messages, data,
images or programs which are, by law, defamatory, obscene or pornographic, or in
any way violate any applicable laws of the Online Territory; and
7.3 Licensee shall at all times meet or exceed the Technical Certification
Requirements, Service Level Requirements, and Customer Service Requirements set
forth in the Xbox Guide.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the Effective Date on the dates indicated below.
MICROSOFT LICENSING, INC. ACTIVISION PUBLISHING, INC.
By: /s/Brian Russel By: /s/ George Rose
- ------------------------------------ ------------------------------------
Name: BRIAN RUSSEL Name: George Rose
- ------------------------------------ ------------------------------------
Title: OEM ACCOUNTING MANAGER Title: Sr. VP & Gen. Counsel
- ------------------------------------ ------------------------------------
Date: 10/28/02 Date: 10-23-02
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