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Exhibit 10.71
CONTRACT # 154486
XBOX 360 PUBLISHER LICENSE AGREEMENT
This Xbox 360 Publisher License
Agreement ("Agreement") is entered into and effective as of the
later of the two signature dates below (the "Effective Date") by
and between Microsoft Licensing, GP , a Nevada general
partnership ("Microsoft"), and Midway Home Entertainment Inc., a
Delaware corporation ("Publisher").
RECITALS
A. Microsoft and its
affiliated companies develop and license a computer game system
known as the Xbox 360 game system and a proprietary online service
accessible via the Xbox 360 game system known as Xbox Live.
B. Publisher wishes
to develop and/or publish one or more software products running on
the Xbox 360 game system, which software products may also be made
available to subscribers of Xbox Live, and to license proprietary
materials from Microsoft on the terms and conditions set forth
herein.
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 Publisher agree
as follows:
1. Exhibits
The following exhibits are hereby incorporated to this Agreement
(some require completion and/or execution by one or both
parties):
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Exhibit 1:
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Payments
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Exhibit 2:
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Xbox 360 Royalty Tier Selection Form
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Exhibit 3:
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Xbox 360 Publisher Enrollment Form
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Exhibit 4:
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Authorized Subsidiaries
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Exhibit 5:
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Non-Disclosure Agreement
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Exhibit 6:
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Japan/Asian Royalty Incentive Program
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Exhibit 7:
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Xbox Live Incentive Program
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2. Definitions
As further described in this Agreement and the Xbox 360
Publisher Guide (defined below), the following terms have the
following respective meanings:
2.1 "Asian Manufacturing
Region" means the region for manufacturing comprising Taiwan,
Hong Kong, Singapore, Korea, Japan and any other countries that are
included by Microsoft from time to time as set forth in the Xbox
360 Publisher Guide.
2.2 "Asian Sales Territory"
means the territory for sales distribution comprising Taiwan, Hong
Kong, Singapore, Korea, and any other countries that are included
by Microsoft from time to time as set forth in the Xbox 360
Publisher Guide. The Asian Sales Territory does not include
Japan.
2.3 "Authorized Replicator"
means a software replicator certified and approved by Microsoft for
replication of FPUs (defined below) that run on the Xbox 360.
2.4 " Branding
Specifications " means the specifications as provided by
Microsoft from time to time for using the Licensed Trademarks in
connection with a Software Title and/or Online Content and on
Marketing Materials as set forth in the Xbox 360 Publisher
Guide.
2.5 "BTS" means a Microsoft
designed break-the-seal sticker that will be issued to the
Authorized Replicator for placement on the Packaging Materials
(defined below) as specified in the Xbox 360 Publisher Guide.
2.6 "Certification" means
the final stage of the approval process by which Microsoft approves
or disapproves of a Software Title or Online Content for
manufacture and/or distribution. Certification is further defined
in this Agreement and the Xbox 360 Publisher Guide.
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2.7 "Commercial Release "
with respect to a Software Title means the first commercial
distribution of an FPU that is not designated as a Demo Version.
With respect to Online Content, Commercial Release means its first
availability via Xbox Live to Xbox Live Users.
2.8 "Concept" means the
detailed description of Publisher’s proposed Software Title
and/or Online Content in each case including such information as
may be requested by Microsoft.
2.9 "Demo Versions" means a
small portion of an applicable Software Title that is provided to
end users to advertise or promote a Software Title.
2.10 "European Sales
Territory" means the territory for sales distribution
comprising the United Kingdom, France, Germany, Spain, Italy,
Netherlands, Belgium, Sweden, Denmark, Norway, Finland, Austria,
Switzerland, Ireland, Portugal, Greece, Australia, New Zealand and
any other countries that are included by Microsoft from time to
time as set forth in the Xbox 360 Publisher Guide
2.11 "European Manufacturing
Region" means the region for manufacturing comprising the
United Kingdom, France, Germany, Spain, Italy, Netherlands,
Belgium, Sweden, Denmark, Norway, Finland, Austria, Switzerland,
Ireland, Portugal, Greece, Australia, New Zealand and any other
countries that are included by Microsoft from time to time as set
forth in the Xbox 360 Publisher Guide.
2.12 "FPU" or "Finished
Product Unit" means a copy of a Software Title in object code
form that has passed Certification, has been affixed to a DVD disk
and approved by Microsoft for release and manufacturing. Once the
Packaging Materials have been added, and the BTS has been assigned
or affixed to the FPU or its packaging, the FPU also includes its
accompanying BTS and Packaging Materials.
2.13 "Japan Sales
Territory" means the territory for sales distribution
comprising the country of Japan.
2.14 "Licensed Trademarks"
means the Microsoft trademarks identified in the Xbox 360 Publisher
Guide.
2.15 "Marketing Materials "
collectively means the Packaging Materials and all press releases,
marketing, advertising or promotional materials related to the
Software Title, FPUs and/or Online Content (including without
limitation Web advertising and Publisher’s Web pages to the
extent they refer to the Software Title(s), FPU(s) and/or Online
Content) that will be used and distributed by Publisher in the
marketing of the Software Title(s), FPU(s) and/or Online
Content.
2.16 "Manufacturing Region"
means the Asian Manufacturing Region, European Manufacturing
Region, and/or North American Manufacturing Region.
2.17 "North American Sales
Territory" means the territory for sales distribution
comprising the United States, Canada, Mexico, Colombia and any
other countries that may be included by Microsoft from time to time
as set forth in the Xbox 360 Publisher Guide
2.18 "North American
Manufacturing Region" means the region for manufacturing
comprising the United States, Canada, Mexico, Colombia and any
other countries that may be included by Microsoft from time to time
as set forth in the Xbox 360 Publisher Guide
2.19 "Online Content" means
any content, feature, or access to software or online service that
is distributed by Microsoft pursuant to this Agreement. Online
Content includes, but is not limited to, Online Game Features,
Title Updates, Demo Versions, trailers, "themes," "gamer pictures"
or any other category of online content or service approved by
Microsoft from time to time. Trailers, "themes," "gamer pictures"
and any other approved Online Content will be further described in
the Xbox 360 Publisher Guide.
2.20 "Online Game Features"
means a Software Title’s content, features and/or services
that are available to Xbox Live Users via Xbox Live, whether
included in the Software Title’s FPU or otherwise distributed
via Xbox Live.
2.21 "Packaging Materials"
means art and mechanical formats for a Software Title including the
retail packaging, end user instruction manual with end user license
agreement and warranties, end user warnings, FPU media label, and
any promotional inserts and other materials that are to be included
in the retail packaging.
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2.22 "Pre-Certification"
means the first stage of the approval process wherein Microsoft
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 described in this
Agreement and the Xbox 360 Publisher Guide.
2.23 "Sales Territory"
means the Asian Sales Territory, European Sales Territory, Japan
Sales Territory, and/or North American Sales Territory.
2.24 "Software Title" means
the single software product as approved by Microsoft for use on
Xbox 360, including any Title Updates thereto (if and to the extent
approved by Microsoft) and all Online Game Features for such
Software Title. If Microsoft approves one or more additional single
software product(s) proposed by Publisher to run on Xbox 360, this
Agreement, and the term "Software Title," will be broadened
automatically to cover the respective new software product(s) as
additional Software Title(s) under this Agreement.
2.25 "Subscriber" means an
Xbox Live User that establishes an account with Xbox Live.
2.26 "Sub-Publisher" means
an entity that has a valid Xbox 360 publisher license agreement
with Microsoft or a Microsoft affiliate and with whom Publisher has
entered an agreement to allow such entity to publish a Software
Title or Online Content in specific Sales Territories.
2.27 "Suggested Retail
Price" means the highest per unit price that Publisher or its
agent recommends the FPU be made commercially available to
end-users in a particular Sales Territory. If the Suggested Retail
Price of a particular Software Title varies among the countries in
a single Sales Territory, then the highest Suggested Retail Price
established for any of the countries will be used to determine the
appropriate royalty fees for the entire Sales Territory.
2.28 " Title Update" means
an update, upgrade, or technical fix to a Software Title that Xbox
Live Users can automatically download to the Xbox Live User’s
Xbox 360.
2.29 "Wholesale Price"
means the highest per unit price that Publisher charges retailers
and/or distributors in bona fide third party transactions for the
right to distribute and sell the Software Title within a Sales
Territory, it being agreed that (i) any transactions involving
affiliates of Publisher (entities controlling, controlled by or
under common control of, Publisher) are not to be considered in
determining the Wholesale Price; (ii) if Publisher enters into
an agreement with a third party (such as a Sub-Publisher) providing
the third party with the exclusive right to distribute the Software
Title in a Sales Territory, the Wholesale Price is governed by the
price charged by the third party rather than the terms of the
exclusive distribution agreement between Publisher and such third
party; and (iii) if the Wholesale Price varies among countries
in a single Sales Territory, the highest Wholesale Price used in
the Sales Territory will be used to determine the appropriate
royalty fees for the entire Sales Territory.
2.30 "Xbox 360 " means the
second version of Microsoft’s proprietary game system,
successor to the Xbox game system, including operating system
software and hardware design specifications.
2.31 "Xbox 360 Publisher
Guide" means a document (in physical, electronic or Web site
form) created by Microsoft that supplements this Agreement and
provides detailed requirements regarding the Pre-Certification and
Certification approval process, Branding Specifications,
replication requirements, royalty payment process, marketing
guidelines, technical specifications and certification
requirements, Demo Version requirements, packaging requirements and
other operational aspects of the Xbox 360 and Xbox Live. Microsoft
may supplement, revise or update the Xbox 360 Publisher Guide from
time to time in its reasonable discretion as set forth in this
Agreement. Notwithstanding anything to the contrary in this
Agreement, under no circumstances shall the Xbox 360 Publisher
Guide alter any terms or conditions found in this document entitled
"Xbox 360 Publisher License Agreement" in a manner that is
unfavorable to Publisher.
2.32 "Xbox Live" means the
proprietary online service offered by Microsoft to Xbox Live
Users.
2.33 "Xbox Live User" means
any individual that accesses and uses Xbox Live.
2.34 Other Terms . All
other capitalized terms have the definitions set forth with the
first use of such term as described in this Agreement.
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3. Xbox 360 Development Kit License
Publisher shall enter into one or more development kit
license(s) for the applicable territory(ies) to which Xbox 360 game
development kits will be shipped for use by Publisher (each an "XDK
License") pursuant to which Microsoft or its affiliate may license
to Publisher software development tools and hardware to assist
Publisher in the development and testing of Software Titles,
including redistributable code that Publisher must incorporate into
Software Titles pursuant to the terms and conditions contained in
the XDK License.
4. Approval Process
4.1 Standard Approval
Process . The standard approval process for a Software Title is
divided into four phases comprised of Concept approval,
Pre-Certification, Certification, and Marketing Materials approval.
Unless Publisher elects the EU Approval Option for a European FPU
(described below), Publisher is required to submit its Software
Title to Microsoft for evaluation at all four phases. Each phase is
identified below and further described in the Xbox 360 Publisher
Guide. Additional or alternate approval processes for Online
Content may be further described in the Xbox 360 Publisher
Guide
4.1.1
Concept. For each Software Title, Publisher shall deliver to
Microsoft a completed Concept submission form (in the form provided
by Microsoft to Publisher) that describes the Software Title. In
the event that Publisher desires to host or have a third party host
or provide to Xbox Live Users any of Publisher’s Online Game
Features, Publisher shall so indicate on the Concept submission
form and must execute an addendum to this Agreement, which addendum
is available upon request and will be incorporated into this
Agreement upon execution. Following evaluation of Publisher’s
Concept submission, Microsoft will notify Publisher of whether the
Concept is approved or rejected. If approved, the Concept
submission form, in the form submitted by Publisher and approved by
Microsoft, is incorporated herein by reference and adherence to its
terms is a requirement for Certification. Publisher may propose
Online Content at any time after a Concept has been approved, in
which case Publisher shall deliver to Microsoft a separate Concept
submission for each proposed piece of Online Content.
4.1.2
Pre-Certification. If the Concept is approved, Publisher shall
deliver to Microsoft a code-complete version of the Software Title
or Online Content that includes all current features of the
Software Title and such other content as may be required under the
Xbox 360 Publisher Guide. Upon receipt, Microsoft shall conduct
technical screen and/or other testing of the Software Title or
Online Content consistent with the Xbox 360 Publisher Guide and
will subsequently provide Publisher with advisory feedback
regarding such testing.
4.1.3
Certification. Following Pre-Certification, Publisher shall deliver
to Microsoft the proposed final release version of the applicable
Software Title that is complete, ready for access via Xbox Live (if
applicable), release, manufacture, and commercial distribution.
Such version must include the final content rating certification
required by Section 4.4, have identified program errors
corrected, and have any and all changes previously required by
Microsoft implemented. Microsoft shall conduct compliance,
compatibility, functional and other testing consistent with the
Xbox 360 Publisher Guide ("Certification Testing") and shall
subsequently provide Publisher with the results of such testing,
including any required fixes required prior to achieving
Certification. Release from Certification for a Software Title (and
for Online Content as applicable) is based on (1) passing the
Certification Testing; (2) conformance with the approved
Concept and any required submission materials as stated in the Xbox
360 Publisher Guide; (3) Packaging Materials approval;
(4) consistency with the goals and objectives of the Xbox 360
console platform and Xbox Live; and (5) continuing and ongoing
compliance with all Certification requirements and other
requirements as set forth in the Xbox 360 Publisher Guide and this
Agreement.
4.1.4
Marketing Materials Approval. Publisher shall submit all Marketing
Materials to Microsoft and shall not distribute such Marketing
Materials unless and until Microsoft has approved them in writing.
Prior to use or publication of any Marketing Materials, Publisher
agrees to incorporate all changes relating to use of the Licensed
Trademarks that Microsoft may request and will use its commercially
reasonable efforts to incorporate other changes reasonably
suggested by Microsoft (provided, however, that in any event
Publisher shall at all times comply with the Branding
Specifications).
4.1.5
Notwithstanding anything to the contrary in this Agreement
(including, without limitation, any version of the Xbox Guide),
Publisher shall have no liability to Microsoft whatsoever under
this Agreement should Publisher cancel or delay the development of
a Software Title.
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4.2 EU Approval Option .
For a Software Title that Publisher intends to distribute solely in
the European Sales Territory (a "European FPU"), Publisher may
choose to forego Concept approval (Section 4.1.1),
Pre-Certification (Section 4.1.2) and/or Marketing Materials
approval (Section 4.1.4) and submit such Software Title to
Microsoft only for Certification approval. This option is referred
to herein as the "EU Approval Option." The EU Approval Option
applies solely to distribution of European FPUs, and is not
available for Online Content intended to be available in the
European Sales Territory. If Publisher chooses the EU Approval
Option, Publisher shall not use the Licensed Trademarks on the
European FPU and the license grant set forth in Section 12.1
is withdrawn as to such European FPU. In addition, Publisher shall
make no statements in advertising, marketing materials, packaging,
Web sites or otherwise that the European FPU is approved or
otherwise sanctioned by Microsoft or is an official Xbox 360
Software Title. The European FPU may not be distributed outside the
European Sales Territory without complying with all terms of this
Agreement concerning approvals and the release of the FPU as deemed
relevant by Microsoft. Microsoft may provide additional information
in the Xbox 360 Publisher Guide regarding the European Approval
Option. Notwithstanding Publisher’s choice of the EU Approval
Option, all other portions of this Agreement other than those
specifically identified above shall remain in effect.
4.3 Resubmissions and
Additional Review . If a Software Title or Online Content fails
Certification, and if Publisher has made good faith efforts to
address any issues raised by Microsoft, Microsoft will give
Publisher the opportunity to resubmit such Software Title or Online
Content for Certification. Microsoft may charge Publisher a
reasonable fee designed to offset the costs associated with testing
upon resubmission. Publisher may request the ability to submit
versions of the Software Title or Online Content at stages of
development other than as identified above for review and feedback
by Microsoft. Such review is within the discretion of Microsoft and
may require the payment of reasonable fees by Publisher to offset
the costs associated with the review of such Software Titles or
Online Content.
4.4 Content Rating . For
those Sales Territories that utilize a content rating system,
Microsoft will not accept submission of a Software Title for
Certification approval unless and until Publisher has obtained, at
Publisher’s sole cost, a rating not higher than "Mature
(17+)" or its equivalent from the appropriate rating bodies and/or
any and all other independent content rating authority/authorities
for the applicable Sales Territory(ies) reasonably designated by
Microsoft (such as ESRB, ELSPA, CERO, etc. ). Publisher
shall include the applicable rating(s) prominently on FPUs and
Marketing Materials, in accordance with the applicable rating body
guidelines, and shall include the applicable rating in a header
file of the Software Title and in Online Content, as described in
the Xbox 360 Publisher Guide. For those Sales Territories that do
not utilize a content rating system, Microsoft will not approve any
Software Title or Online Content that, in its opinion, contains
excessive sexual content or violence, inappropriate language or
other elements deemed unsuitable for the Xbox 360 platform. If,
after Commercial Release, a Software Title is determined by the
ESRB, ELSPA, or CERO (or its equivalent agency in other Sales
Territories) as suitable for adults only or otherwise indecent,
obscene or otherwise prohibited by law, the Publisher shall at its
own costs recall all FPUs. If, after Commercial release, a Software
Title distributed in a Sales Territory without a ratings body is
determined by Microsoft, in its reasonable discretion, as suitable
for adults only, or otherwise indecent or obscene, or otherwise
prohibited by law, the Publisher shall at its own cost recall all
FPUs. If, after Commercial release, a Software Title is determined
by Microsoft, in its reasonable discretion, as suitable for adults
only or otherwise indecent or obscene, or otherwise prohibited by
law due to content that was not disclosed to Microsoft during the
Certification process, then Publisher shall at its own costs recall
all FPUs. Publisher hereby represents and warrants that any Online
Game Features and other game-related Online Content not included in
the initial Software Title FPU will not be inconsistent with the
content rating (or, in those countries that do not utilize a
content rating system, with the overall nature of the content) of
the underlying Software Title. Content rating information and
requirements may be further described in the Xbox 360 Publisher
Guide.
4.5 Publisher Testing .
Publisher shall perform its own testing of the Software Title and
FPUs. Upon Microsoft’s request, Publisher shall provide
Microsoft with copies of, or reasonable access to inspect the FPUs
and Software Title (either in pre-Commercial Release or Commercial
Release versions, as Microsoft may request).
4.6 Mutual Approval
Required . Publisher shall not distribute the Software Title,
nor manufacture any FPU intended for distribution, unless and until
Microsoft has given its final approval and release from
Certification version of the Software Title and both parties have
approved the FPU in writing.
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4.7 Title Updates
4.7.1
All Title Updates for Software Titles are subject to approval by
Microsoft. Publisher may release [*] Title Update [*]
per Software Title free of charge. Any additional Title Updates
proposed by Publisher may be subject to a reasonable charge.
4.7.2
Microsoft may require Publisher to develop and provide a Title
Update if (a) a Software Title or Online Content adversely
affects Xbox Live, (b) if a change to the Xbox 360 Publisher
Guide requires a Title Update, (c) if Certification is revoked
for Online Content, or (d) for any other reason at
Microsoft’s reasonable discretion. Microsoft will not charge
Publisher for the Certification, hosting, and distribution of Title
Updates to Xbox Live Users for the first Title Update (if any) per
Software Title or Online Content required by a specific change in
the Xbox 360 Publisher Guide, or for any other reason at
Microsoft’s reasonable discretion. Microsoft reserves the
right to charge Publisher a reasonable fee to offset the costs
associated with the Certification, hosting, and distribution of
Title Updates to Xbox Live Users that are required because of
revocation of Certification or a Software Title or Online Content
adversely affecting Xbox Live.
5. Xbox 360 Publisher Guide
Publisher acknowledges that the Xbox 360 Publisher Guide is an
evolving document and subject to change during the term of this
Agreement. Publisher agrees to be bound by all provisions contained
in the then-applicable version of the Xbox 360 Publisher Guide.
Publisher agrees that upon Publisher’s receipt of notice of
availability of the applicable supplement, revision, or updated
version of the Xbox 360 Publisher Guide (which may be via a
publisher newsletter or other electronic notification), Publisher
automatically is bound by all provisions of the Xbox 360 Publisher
Guide as supplemented, revised, or updated. Publisher’s
continued distribution of FPUs after a notice of supplement,
revision or update is included in the Xbox 360 Publisher Guide or
made available to Publisher constitutes Publisher’s agreement
to the then-current Xbox 360 Publisher Guide as supplemented,
revised or updated. Microsoft will specify in each such supplement,
revision or update a reasonable effective date of each change if
such change is not required to be effective immediately. Only with
respect to a Software Title that has passed Pre-Certification prior
to the applicable revision or update, Publisher will not be
obligated to comply with any changes made to the technical or
content requirements for Software Titles in the Xbox 360 Publisher
Guide, except in circumstances where such change is deemed by
Microsoft to be vitally important to the success of the Xbox 360
platform (e.g. changes due to piracy, technical failure) and such
change would apply broadly to other Software Titles and Publishers
(i.e., rather than applying only to a single Software Title or
publisher) or Publisher will not incur any significant expense to
accommodate such change. In addition, changes made in Branding
Specifications or other Marketing Materials requirements will be
effective as to a Software Title that has passed Certification only
on a "going forward" basis ( i.e., only to such Marketing
Materials and/or FPUs as are manufactured after Microsoft notifies
Publisher of the change). Notwithstanding the foregoing, Publisher
shall comply with such changes to the Xbox 360 Publisher Guide
related to Branding Specifications or other Marketing Materials
requirements retroactively if Microsoft agrees to pay for
Publisher’s direct, out-of-pocket expenses necessarily
incurred as a result of its retrospective compliance with the
change.
6. Post-Release Compliance
6.1 Correction of Bugs or
Errors . Notwithstanding Microsoft’s Certification, all
Software Titles must remain in compliance with all Certification
requirements and requirements set forth in the Xbox 360 Publisher
Guide on a continuing and ongoing basis. Publisher must correct any
material program bugs or errors in conformance with the Xbox 360
Publisher Guide whenever discovered and Publisher agrees to correct
such material bugs and errors as soon as possible after discovery.
With respect to bugs or errors discovered after Commercial Release
of the applicable Software Title, Publisher will, at
Microsoft’s request or allowance, correct the bug or error in
all FPUs to be manufactured after discovery and Microsoft may
charge a reasonable amount to cover the costs of Certifying the
Software Title again.
6.2 Online Content; Minimum
Commitment
6.2.1
Publisher agrees that each Online Game Feature of a Software Title
will be made available via Xbox Live for at least [ *
] following the respective Commercial Release of the FPUs of
the Software Title in each Sales Territory in which Xbox Live is
available (the "Minimum Commitment"). Publisher is obligated to
provide all necessary support for such Online Game Feature during
its availability and for [*] after discontinuation.
Following the Minimum Commitment period, Publisher may terminate
Microsoft’s license associated with such Online Game Feature
upon [*] prior
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Information has been omitted from this
document and filed separately with the SEC under a request for
confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
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written notice to Microsoft; and/or Microsoft may discontinue
the availability of any or all such Online Game Feature via Xbox
Live upon [*] prior written notice to Publisher. Publisher
is responsible for communicating the duration of Online Game
Feature availability to Xbox Live Users, and for providing
reasonable advance notice to Xbox Live Users of any discontinuation
of such Online Game Feature.
6.2.2
Subject to Section 10.3, and unless otherwise agreed upon by
the Parties,, Publisher agrees that Microsoft has the right to make
Online Content other than Online Games Features submitted by
Publisher available to Xbox Live Users for the Term of this
Agreement. Publisher agrees to provide all necessary support for
such Online Content as long as such Online Content is made
available to Xbox Live Users and for [*] thereafter.
6.2.3
Archive Copies. Publisher agrees to maintain, and to possess the
ability to support, copies in object code, source code and symbol
format, of all Online Content available to Xbox Live Users during
the term of this Agreement and for no less than [ * ]
thereafter.
7. Manufacturing
7.1 Authorized Replicators
. Publisher will use only Authorized Replicators to produce FPUs.
Prior to placing an order with a replicator for FPUs, Publisher
shall confirm with Microsoft that such entities are Authorized
Replicators. Microsoft will endeavor to keep an up-to-date list of
Authorized Replicators in the Xbox 360 Publisher Guide. Publisher
will notify Microsoft in writing of the identity of the applicable
Authorized Replicators and the agreement for such replication
services shall be as negotiated by Publisher and the applicable
Authorized Replicators, subject to the requirements in this
Agreement. Publisher acknowledges that Microsoft may charge the
Authorized Replicators fees for rights, services or products
associated with the manufacture of FPUs and that the agreements
with the Authorized Replicators grant Microsoft the right to
instruct the Authorized Replicators to cease the manufacture or FPU
and/or prohibit the release of FPU to Publisher or its agents in
the event Publisher is in breach of this Agreement or any credit
arrangement entered into by Microsoft and Publisher or Publisher
affiliates. Microsoft does not guarantee any level of performance
by the Authorized Replicators, and Microsoft will have no liability
to Publisher for any Authorized Replicator’s failure to
perform its obligations under any applicable agreement between
Microsoft and such Authorized Replicators and/or between Publisher
and such Authorized Replicators. Microsoft has no responsibility
for ensuring that FPUs are free of all defects.
7.2 Submissions to the
Authorized Replicator . Microsoft, and not Publisher, will
provide to the applicable Authorized Replicators the final release
version of the Software Title and all specifications required by
Microsoft for the manufacture of the FPUs including, without
limitation, the Security Technology (as defined in Section 7.9
below). Publisher is responsible for preparing and delivering to
the Authorized Replicators all other items required for
manufacturing FPUs including approved Packaging Materials
associated with the FPUs. Subject to the approval of Publisher
(which approval shall not be unreasonably withheld), Microsoft has
the right to have included in the packaging of FPUs such
promotional materials for Xbox, Xbox 360, Xbox Live, and/or other
Xbox or Xbox 360 products or services (other than video games) as
Microsoft may determine in its reasonable discretion. Microsoft
will be responsible for delivering to the Authorized Replicator all
such promotional materials as it desires to include with FPUs, and,
unless otherwise agreed by the parties, any incremental insertion
costs relating to such marketing materials will be borne by
Microsoft.
7.3 Verification Versions .
Publisher shall cause the Authorized Replicators to create several
test versions of each FPU ("Verification Version(s)") that will be
provided to both Microsoft and Publisher for evaluation. Prior to
full manufacture of a FPU by the Authorized Replicators, both
Publisher and Microsoft must approve the applicable Verification
Version. Throughout the manufacturing process and upon the request
of Microsoft, Publisher shall cause the Authorized Replicators to
provide additional Verification Versions of the FPU for evaluation
by Microsoft. Microsoft’s approval is a condition precedent
to manufacture, however Publisher shall grant the final approval
and shall work directly with the Authorized Replicator regarding
the production run. Publisher agrees that all FPUs 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
Packaging Materials must be approved by Microsoft prior to
packaging. Publisher shall cause the Authorized Replicator to
include the BTS on each FPU.
7.4 Samples . For each
Software Title sku, at Publisher’s cost, Publisher shall
provide Microsoft with [*] FPUs and accompanying Marketing
Materials per Sales Territory in which the FPU will be released.
Such units may be used in marketing (subject to Publisher’s
consent), as product samples, for customer support, testing and for
archival purposes.
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Information has been omitted from this
document and filed separately with the SEC under a request for
confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
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Publisher will not have to pay a royalty fee for such samples
nor will such samples count towards the Unit Discounts under
Exhibit 1 .
7.5 Minimum Order Quantities
7.5.1
Within [*] after the date on which both Microsoft and
Publisher have authorized the Authorized Replicator to begin
replication of FPUs for distribution to a specified Sales
Territory, (receipt of both approvals is referred to as "Release to
Manufacture"), Publisher must place orders to manufacture the
minimum order quantities ("MOQs") as described in the Xbox 360
Publisher Guide. Microsoft may update and revise the MOQs
[*] which will be effective starting the following
[*] . Currently, the MOQs are as follows:
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7.5.2
For the purposes of this section, a "Disc" shall mean an FPU that
is signed for use on a certain defined range of Xbox 360 hardware,
regardless of the number of languages or product skus contained
thereon. The MOQs per Software Title are cumulative per Sales
Territory. For example, if an FPU is released in both the North
American Sales Territory and the European Sales Territory, the
cumulative MOQ per Software Title would be [*] . The MOQ per
Software Title and the MOQ per Disc, however, are not cumulative.
For example, a single Disc FPU released only in the North America
Sales Territory will have a total minimum order quantity of
[*] , which would cover the [*] MOQ per Software
Title and the [*] MOQ per Disc (rather than [*] which
would have been the total minimum order quantity if the MOQ per
Software Title and the MOQ per Disc had been
cumulative).
7.5.3
If Publisher fails to place orders to meet any applicable minimum
order quantity within [*] of Release to Manufacture,
Publisher shall immediately pay Microsoft the applicable royalty
fee for the number of FPUs represented by the difference between
the applicable MOQ and the number of FPUs of the Software Title
actually ordered by Publisher.
7.6 Manufacturing Reports .
For purposes of assisting in the scheduling of manufacturing
resources, on a [*] basis, Publisher shall provide Microsoft
with forecasts showing manufacturing projections by Sales Territory
[*] out for each Software Title. Publisher will use
commercially reasonable efforts to cause the Authorized Replicator
to deliver to Microsoft true and accurate [*] statements of
FPUs manufactured in each [ * ] , on a Software
Title-by-Software Title basis and in sufficient detail to satisfy
Microsoft, within [*] . Microsoft will have reasonable audit
rights to examine the records of the Authorized Replicator
regarding the number of FPUs manufactured.
7.7 New Authorized
Replicator . If Publisher requests that Microsoft certify and
approve a third party replicator that is not then an Authorized
Replicator, Microsoft will consider such request in good faith.
Publisher acknowledges and agrees that Microsoft may condition
certification and approval of such third party on the execution of
an agreement in a form satisfactory to Microsoft pursuant to which
such third party agrees to strict quality standards, non-disclosure
requirements, license fees for use of Microsoft intellectual
property and trade secrets, and procedures to protect
Microsoft’s intellectual property and trade secrets.
Notwithstanding anything contained herein, Publisher acknowledges
that Microsoft is not required to certify, maintain the
certification or approve any particular third party as an
Authorized Replicator, and that the certification and approval
process may be time-consuming.
7.8 Alternate Manufacturing in
Europe . Publisher may, solely with respect to FPUs
manufactured for distribution in the European Sales Territory,
utilize a different process or company for the combination of a FPU
with Packaging Materials provided that such packaging process
incorporates the BTS and otherwise complies with the Xbox 360
Publisher Guide. Publisher 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,
Publisher shall modify its operations to comply with
Microsoft’s requirements.
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*
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Information has been omitted from this
document and filed separately with the SEC under a request for
confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
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8
7.9 Security . Microsoft
has the right to add to the final release version of the Software
Title delivered by Publisher to Microsoft, and to all FPUs, such
digital signature technology and other security technology and
copyright management information (collectively, "Security
Technology") as Microsoft may determine to be necessary, and/or
Microsoft may modify the signature included in any Security
Technology included in the Software Title by Publisher at
Microsoft’s discretion. Additionally, Microsoft may add
Security Technology that prohibits the play of Software Titles on
Xbox 360 units manufactured in a region or country different from
the location of manufacture of the respective FPUs or that have
been modified in any manner not authorized by Microsoft.
7.10 Demo Versions . If
Publisher wishes to distribute a Demo Version in FPU format,
Publisher must obtain Microsoft’s prior written approval and
Microsoft may charge a reasonable fee to offset costs of the
Certification. Subject to the terms of the Xbox 360 Publisher
Guide, such Demo Version(s) may be placed on a single disc, either
as a stand-alone or with other Demo Versions and the price of such
units must be [*] or its equivalent in local currency.
Unless separately addressed in the Xbox 360 Publisher Guide, all
rights, obligations and approvals set forth in this Agreement as
applying to Software Titles shall separately apply to any Demo
Version. [ * ] . If Publishers wishes to distribute a
Demo Versions in an online downloadable format, such downloadable
Demo Version shall be distributed via by Microsoft Xbox Live in
accordance with Section 10.3, and such downloadable Demo
Version will be subject to all other terms and policies applicable
to Online Content set forth herein and in the Xbox 360 Publisher
Guide.
8. Payments
The Parties shall make payments to each other under the terms of
Exhibit 1 .
9. Marketing, Sales and Support
9.1 Publisher Responsible .
As between Microsoft and Publisher, Publisher is solely responsible
for the marketing and sales of the Software Title. Publisher is
also solely responsible for providing technical and all other
support relating to the FPUs (including for Xbox Live Users of
Online Content). Publisher shall provide all appropriate contact
information (including without limitation Publisher’s address
and telephone number, and the applicable individual/group
responsible for customer support), and shall also provide all such
information to Microsoft for posting on http://www.xbox.com, or
such successor or related Web site identified by Microsoft or in
Xbox Live. Customer support shall at all times conform to the
Customer Service Requirements set forth in the Xbox 360 Publisher
Guide and industry standards in the console game industry.
9.2 Warranty. Publisher
shall provide the original end user of any FPU a minimum warranty
in accordance with local laws and industry practices. For example,
in the United States, Publisher shall, as of the Effective Date,
provide a minimum [*] limited warranty that the FPU will be
free from defects in materials or workmanship or, at
Publisher’s option, Publisher will refund the purchase price
or provide a repaired or replacement FPU at no charge. Publisher
may offer additional warranty coverage consistent with the
traditions and practices of video game console game publishers
within the applicable Sales Territory or as otherwise required by
local law.
9.3 Recall. Notwithstanding
anything to the contrary contained in this Agreement, if there is a
material defect in a Software Title and/or any FPUs, which defect
in the reasonable judgment of Microsoft would significantly impair
the ability of an end user to play such Software Title or FPU or
would adversely affect the gameplay of the Xbox 360 or Xbox Live,
Microsoft may require Publisher to recall FPUs and undertake prompt
repair or replacement of such Software Title and/or FPUs.
9.4 No Bundling with Unapproved
Peripherals, Products or Software . Except as expressly stated
in this section, Publisher shall not market or distribute a FPU
bundled with any other product or service, nor shall Publisher
knowingly permit or assist any third party in such bundling,
without Microsoft’s prior written consent. Publisher may
market or distribute (i) FPU bundled with a Software Title(s)
that has been previously certified and released by Microsoft for
manufacturing; or (ii) FPU bundled with a peripheral product
(e.g. game pads) that has been previously licensed as an "Xbox 360
Licensed Peripheral" by Microsoft, without obtaining the written
permission of Microsoft. Publisher shall contact Microsoft in
advance to confirm that the peripheral or Software Title to be
bundled has previously been approved by Microsoft pursuant to a
valid license.
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*
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Information has been omitted from this
document and filed separately with the SEC under a request for
confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
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9
9.5 Software Title License
. Subject to Publisher’s prior approval for each Software
Title, Publisher grants Microsoft a fully-paid, royalty-free,
worldwide, non-exclusive license (i) to publicly perform the
Software Titles at conventions, events, trade shows, press
briefings, public interactive displays and the like; (ii) to
use the title of the Software Title (only in reference to the
Software Title), and screen shots from the Software Title, in
advertising and promotional material relating to Xbox 360 and
related Microsoft products and services, as Microsoft may
reasonably deem appropriate; (iii) distribute Demo Versions
with the Official Xbox Magazine , as a standalone product
with other demo software; and (iv) distribute Software Title
trailers via xbox.com. Publisher may also select Online Content for
inclusion in public interactive displays and/or compilation demo
discs published by Microsoft, in which case Publisher grants
Microsoft a fully-paid, royalty-free, worldwide, transferable,
sublicenseable license to broadcast, transmit, distribute, host,
publicly display, reproduce and manufacture such selected Online
Content as part of public interactive displays and compilation demo
discs, and to distribute and permit end users to download and store
(and, at Publisher’s discretion,
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