XBOX 360 ACCESSORY LICENSE AGREEMENT

Exhibit 10.1

NOTE: CERTAIN MATERIAL HAS BEEN OMMITTED FROM THIS AGREEMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE LOCATIONS OF THESE OMISSIONS ARE INDICATED THROUGHOUT THE AGREEMENT BY THE FOLLOWING MARKINGS: [***].

XBOX 360 ACCESSORY LICENSE AGREEMENT

This Xbox 360 Accessory License Agreement (the “Agreement” ) is made and entered into as of the later of the two signature dates below (the “Effective Date” ) by and between Mad Catz, Inc. ( “Company” ), a Delaware corporation with its principal place of business at 7480 Mission Valley Road, Suite 101, San Diego, California 92108, and Microsoft Corporation, a Washington, U.S.A. corporation with its principal place of business at One Microsoft Way, Redmond, Washington 98052 ( “Microsoft” ).

1. Definitions .

      1.1 “Approved Subcontractor” means a Company subcontractor that is identified on Exhibit H and provides manufacturing services for the Licensed Product(s).

      1.2 “ Approved Vendor ” means a Microsoft-approved supplier of Xbox 360 Chips that is identified in Exhibit F .

      1.3 “Baseband Chip” means an application specific integrated circuit that instantiates the Baseband Firmware and is made by an Approved Vendor.

      1.4 “Baseband Firmware” means the proprietary Microsoft firmware instantiated on a silicon baseband chip and designed to allow the chip to operate within the Xbox 360 console platform.

      1.5 “Branding Specifications ” means the specifications in Exhibit B-2 for using the Xbox 360 Logos, as such specifications may be updated or supplanted by Microsoft from time to time.

      1.6 “ Certification Specifications ” means the then-current Xbox 360 accessory and interface specifications used by Microsoft or the Certification Testing Center to verify the compatibility of Proposed Products with the Xbox 360 console.

      1.7 “Certification Testing Center” means an entity identified on Exhibit D , as may be updated by Microsoft from time to time, to verify the compatibility of Proposed Products with the Xbox 360 console in accordance with the Certification Specifications.

      1.8 “Firmware” means (a) the Security Firmware, (b) the Wireless Firmware, and (c) the Baseband Firmware, if Company licenses the Baseband Firmware as described in Section 3.2.

      1.9 “Licensed Product ” means a Proposed Product that meets the Xbox 360 Certification Specifications, has passed the Xbox 360 certification process described in Section 6, and meets the Quality Standards and Microsoft Standards.

      1.10 “Licensed for Xbox 360 Logo ” means the “Licensed for Xbox 360 Logo” as provided by Microsoft to Company and identified in Exhibit B-1 for use on the Product Package and related promotional materials, advertising and documentation for Licensed Product(s) in accordance with the terms of this Agreement.

      1.11 “Microsoft Materials” means the Technical Documentation, Firmware and Necessary Claims.

      1.12 “Microsoft Standards” means Microsoft’s restricted substances specifications (including without limitation any lead-free product requirements), Vendor Code of Conduct and

Microsoft Confidential

Microsoft’s social and environmental compliance specification as released to Company prior to execution and delivery of this Agreement and as updated by Microsoft from time to time.

      1.13 “ Necessary Claims ” means claims (a) of a patent or patent application that Microsoft now or hereafter owns or otherwise has the right to license to Company, without the payment of any royalty or other amounts to any unaffiliated third party, that (b) are necessarily infringed by implementation of the Security Feature or the Wireless Feature. For purposes of the foregoing, a claim is a “Necessary Claim” only when it is not possible to avoid infringement, because there is no technically reasonable, non-infringing alternative implementation. Further, notwithstanding the foregoing, “Necessary Claims” do not include any claims: (1) other than those set forth above, even if contained in the same patent or patent application as Necessary Claims; (2) to any enabling technologies that may be necessary to make or use any product (or a portion thereof) or combination that implements the Security Feature or the Wireless Feature (such as hardware, semiconductor manufacturing, compiler, object-oriented, operating system, protocol, programming interface or networking technologies); (3) covering the implementation of other published specifications that may be referenced in the Microsoft Materials; or (4) to the extent such claim covers any product (or portion thereof) or combination, the purpose or function of which is not included in the Security Feature or the Wireless Feature.

      1.14 “ Product Package ” means the retail package containing the Licensed Product and other materials that are included with the Licensed Product.

      1.15 “Proposed Product” means a pre-release version of Company’s proposed accessory device that Company submits to Microsoft or its Certification Testing Center to verify the device’s compatibility with the Xbox 360 console in accordance with the Certification Specifications.

      1.16 “ Quality Standards ” means the standards of workmanship, overall quality, and performance generally accepted in the video game console accessory industry.

      1.17 “Radio Device” means either (a) the application specific integrated circuit that instantiates the Wireless Feature and is made by an Approved Vendor (i.e. the chip known by the Microsoft internal code name “Adams”) or (b) the module that instantiates the Wireless Feature and is made by an Approved Vendor (i.e. the module known by the Microsoft internal code name “McAdams”).

      1.18 “Security Chip” means the application specific integrated circuit that instantiates the Security Feature and is made by an Approved Vendor.

      1.19 “ Security Feature ” means Microsoft’s proprietary protocol used to validate authentic devices on the Xbox 360 platform.

      1.20 “Security Firmware” means that proprietary Microsoft firmware that implements the Security Feature and is instantiated on a Security Chip.

      1.21 “Technical Documentation” means the specifications, reference code and other technical documentation listed in the attached Exhibit A or otherwise delivered by Microsoft for Company’s use under this Agreement.

      1.22 “Term” means the term of the Agreement set forth in Section 15.1.

      1.23 “Territory” means those countries or regions identified in Exhibit E .

      1.24 “Wireless Feature” means Microsoft’s proprietary protocol used to enable wireless communication between devices on the Xbox 360 platform.

      1.25 “Wireless Firmware” means that proprietary Microsoft firmware that implements the Wireless Feature and is instantiated on a Radio Device.

      1.26 “Wireless Licensed Product” means a Licensed Product that includes the Wireless Feature, but only if Microsoft has approved the inclusion of the Wireless Feature in such Licensed Product during the Product Review and Certification process described in Section 6.

      1.27 “Xbox 360 Chip(s)” means (a) the Security Chip, (b) the Radio Device, and (c) the Baseband Chip, if Company elects to license the Baseband Firmware in accordance with Section 3.2.

      1.28 “Xbox 360 Logos” means the Licensed for Xbox 360 Logo and the Xbox 360 Product Jewel Logo, collectively.

      1.29 “Xbox 360 Product Jewel Logo” means the stylized Xbox 360 “X” logo as provided by Microsoft to Company and identified in Exhibit B-1 for use on Licensed Product(s) in accordance with the terms of this Agreement.

All other initially capitalized terms will have the meanings hereinafter assigned to them.

2. Xbox 360 Development Kit (Peripherals) License .

Prior to submitting any Proposed Product for verification, Company must sign Microsoft’s Xbox 360 Development Kit (Peripherals) (“ PXDK ”) license agreement for third party accessory manufacturers. If Company will use an Approved Subcontractor to manufacture Licensed Products or provide development services related to the Licensed Products, then prior to submitting any corresponding Proposed Product, Company must require that Approved Subcontractor to sign Microsoft’s PXDK license agreement.

3. Licenses .

      3.1 Xbox 360 Security Feature and Wireless Feature. Subject to Company paying all applicable fees and royalties set forth in this Agreement, Microsoft, on behalf of itself and its affiliates, grants to Company a personal, nonexclusive, nontransferable, royalty-bearing, nonsublicensable license to: (a) make and use a reasonable number of copies of the Technical Documentation, but only as necessary for the development of Licensed Products that conform to the specifications included in the Technical Documentation; (b) make derivative works based on source code that may be supplied in the Technical Documentation ( “Derivatives” ), but only for incorporation into Licensed Products; (c) incorporate (i) object code supplied in the Technical Documentation and (ii) Derivatives into the Licensed Product; (d) use and distribute Security Firmware in the Territory, but only as incorporated in Security Chips made by and purchased from Approved Vendors and included in Licensed Products; (e) use and distribute Wireless Firmware in the Territory, but only as incorporated in Radio Devices made by and purchased from Approved Vendors and included in Wireless Licensed Products; and (f) only in the Territory, directly or indirectly sell, offer for sale, import and distribute Licensed Products that implement (i) the Security Feature alone, or (ii) the Security Feature and the Wireless Feature, but only if the Licensed Product is a Microsoft-approved Wireless Licensed Product. Except as specifically provided in (b), (c) and (d) of this Section 3.1, the license grant above does not include any right to disclose or incorporate into any product, including without limitation Licensed any copy of, or derivative work based upon, any Technical Documentation or Firmware.

      3.2 Baseband Firmware. Company may elect to license the Baseband Firmware from Microsoft by notifying Microsoft in writing and paying the Baseband Firmware Fee set forth in Exhibit C . Upon Microsoft’s receipt of the Baseband Firmware Fee, Microsoft, on behalf of itself and its affiliates, grants to Company a personal, nonexclusive, nontransferable, royalty-bearing, nonsublicensable license to: use and distribute the Baseband Firmware only in the Territory and only as incorporated in Baseband Chips made by and purchased from Approved Vendors and included in Licensed Products. The license grant above does not include any right to disclose or incorporate into any product, including without limitation Licensed Products, any copy of, or derivative work based upon, any Technical Documentation or Firmware.

      3.3 Xbox 360 Chip(s). The license granted in Section 3.1 includes the right for Company to purchase Security Chips (at a minimum purchase order quantity of 25,000 units) from an Approved Vendor for use with the Licensed Products, upon such pricing and other terms to be agreed upon between Company and the Approved Vendor. If the Licensed Product is a Wireless Licensed Product, then the license granted in Section 3.1 includes the right for Company to purchase Radio Devices (at a minimum purchase order quantity of 25,000 units) from an Approved Vendor for use with the Licensed Products, upon such pricing and other terms to be agreed upon between Company and the Approved Vendor. If Company elects to license the Baseband Firmware, the license granted in Section 3.2 includes the right for Company to purchase the Baseband Chips (at a minimum purchase order quantity of 25,000 units) from an Approved Vendor for use with the Licensed Products, upon such pricing and other terms to be agreed upon between Company and the Approved Vendor. Microsoft reserves the right to require additional design or other specifications relating to the Xbox 360 Chips and/or to add or decrease security requirements, including, without limitation, implementation of the Security Feature without using the Security Chip.

      3.4 Restrictions.

      (a) No Reverse Engineering. Company shall not reverse engineer, decompile, disassemble, or otherwise access the source code for any portion of the Security Feature, Wireless Feature, or Firmware except (i) as permitted by applicable law which cannot be waived by this subsection, or (ii) as authorized by separate agreement by Microsoft or a Microsoft affiliate. Company shall use commercially reasonable efforts to design Licensed Products to prevent third parties from reverse engineering, decompiling or disassembling any portion of the Security Feature, Wireless Feature, and/or Firmware and to prevent end users from discovering the source code of any component of the underlying Security Feature, Wireless Feature, and/or Firmware.

      (b) No Foundry Products. The license grants above do not include any rights to make, use, sell, offer for sale, import or distribute Licensed Product designed by or for a third party without substantial input from Company, and manufactured, reproduced, sold, leased, licensed or otherwise transferred from Company to that third party (or to customers of, or as directed by, that third party) on essentially an exclusive basis.

      (c) Restricted Software. Company will not use any software subject to an Excluded License to make any derivative of any Microsoft Materials or offer, sublicense or distribute any code supplied in the Microsoft Materials or derivative of any such code in conjunction with any software subject to an Excluded License. “Excluded License” means any license that requires that any (a) Microsoft Materials or component or portion thereof, (b) other software, technology, product, service or documentation incorporating or using any Microsoft Materials, or (c) other software, technology, product, service or documentation combined and/or distributed with any Microsoft Materials be: (x) disclosed or distributed in source code form; (y) licensed for the purpose of making derivative works; or (z) redistributable at no charge.

      3.5 Reservation of Rights. All rights not expressly granted in this Agreement are reserved. No additional rights whatsoever (including, without limitation, any implied licenses) are granted by implication, estoppel or otherwise. Microsoft retains ownership of all right title and interest in the Microsoft Materials.

4. Xbox 360 Logos .

      4.1 Licensed for Xbox 360 Logo. Microsoft will provide Company with the required Licensed for Xbox 360 Logo artwork. Upon approval of the Licensed Product under Section 6.3 and subject to payment of the license fees and royalties set forth in Section 5, Microsoft grants to Company a non-exclusive, fully paid-up, non-transferable, revocable, personal license to use the Licensed for Xbox 360 Logo during the Term only on Company’s Product Package and related promotional materials, advertising, and documentation in connection with the marketing, sales and distribution of the Licensed Product in the Territory, according to the Branding Specifications and the other terms and conditions set forth herein. Company is not authorized or licensed to include the Licensed for Xbox 360 Logo on the

Licensed Product itself or on any labels affixed to the Licensed Product or as part of any warranties made by the Company .

      4.2 Xbox 360 Product Jewel Logo. In addition to the license granted in 4.1, Microsoft grants to Company a non-exclusive, fully paid-up, non-transferable, revocable, personal license during the Term to place the Xbox 360 Product Jewel Logo only on Licensed Product(s) intended for sale in the Territory, according to the Branding Specifications and the other terms and conditions set forth herein. Company is not authorized or licensed to include the Xbox 360 Product Jewel Logo on any promotional materials or advertising in connection with the marketing, sales and distribution of the Licensed Product(s), or as part of any warranties made by the Company. The Xbox 360 Product Jewel Logo is licensed to Company solely for placement on the Licensed Products as set forth herein.

      4.3 Logo Usage Approval.

      (a) Company Submission . Company will deliver to Microsoft the Product Package and any other materials that use or refer to the Xbox 360 Logos or any other Microsoft name ( “Submitted Materials” ). Microsoft will review the Submitted Materials to confirm that the use of the Xbox 360 Logos in the Submitted Materials complies with the Branding Specifications. Company must receive Microsoft’s approval of Submitted Materials prior to any manufacture, distribution or publication of the same. All requests for approval hereunder will be submitted to:

Scott Loomis, Xbox Accessories Program Manager
Microsoft Corporation, One Microsoft Way, Redmond, WA 98052, USA
e-mail: xe3pp@xbox.com

      (b) Microsoft Response. Microsoft will respond to Company’s request for approval of Submitted Materials within a commercially reasonable period of time. Microsoft’s approval or rejection of the request from Company will be delivered via U.S. Mail or e-mail to:

If requested, Company agrees to incorporate Microsoft’s comments or edits prior to publication, manufacture or distribution of any Submitted Materials.

      (c) Use of Approved Materials. After Microsoft has approved Submitted Materials, Company will manufacture, assemble, publish, and distribute the Submitted Materials only as approved by Microsoft and will make no changes to the Submitted Materials without first obtaining Microsoft’s written approval of such change.

      4.4 Logo Usage Requirements and Restrictions.

      (a) Branding Specifications. Company’s use of the Xbox 360 Logos will comply with the Branding Specifications and will conform in all respects to the Submitted Materials finally approved by Microsoft as required hereunder.

      (b) No Third Party Usage; No Merchandising. Company is granted no right to permit any third party to use the Xbox 360 Logos in any manner without Microsoft’s prior written consent and any attempt to do so will be void. Company’s license to use the Xbox 360 Logos in association with Licensed Products will not extend to the merchandising or sale of related or promotional products under such Xbox 360 Logos.

      (c) No Co-Branding. Company will not use the Xbox 360 Logos in association with any third party trademarks in a manner that might suggest co-branding or otherwise create potential confusion as to source or sponsorship of the Licensed Products or ownership of the Xbox 360 Logos without written consent (including via email).

      (d) Other Prohibited Uses. Company will not use Xbox 360 Logos in connection with any activity that (i) disparages Microsoft or its products or services; (ii) violates or infringes any intellectual property of Microsoft; or (iii) violates any local, state, federal, country, or international regulation or law.

      (e) Remedy of Non-Conformance. Upon notice or other discovery of any non-conformance with the requirements or prohibitions of this Section 4, Company will promptly remedy such non-conformance and notify Microsoft of the non-conformance and remedial steps taken.

      4.5 Assistance in Protecting Logos. Company will assist Microsoft in protecting and maintaining Microsoft’s rights in the Xbox 360 Logos worldwide, including preparation and execution of documents necessary to register the Xbox 360 Logos at Microsoft’s expense and giving immediate notice to Microsoft of potential infringement of the Xbox 360 Logos in any country. Microsoft will have the sole right to and in its sole discretion may commence, prosecute or defend, and control any action concerning the Xbox 360 Logos. Company will not contest the validity of, or by act or omission jeopardize, or take any action inconsistent with, Microsoft’s rights or goodwill in the Xbox 360 Logos in any country, including attempted registration of the Xbox 360 Logos or use or attempted registration of any mark confusingly similar thereto.

      4.6 Logo Ownership. Company acknowledges Microsoft’s sole ownership of the Xbox 360 Logos worldwide and all associated goodwill. Nothing in this Agreement or in the performance thereof, or that might otherwise be implied by law, will operate to grant Company any right, title, or interest in or to the Xbox 360 Logos other than as specified in the limited license granted in this Agreement. Company’s use of the Xbox 360 Logos will inure solely to the benefit of Microsoft. Company hereby assigns and will assign in the future to Microsoft all rights it may acquire by operation of law or otherwise in the Xbox 360 Logos, including all applications or registrations therefore, along with the goodwill associated therewith.

5. Payments .

      5.1 License Fees.

      (a) Security Feature Fee. Company will pay Microsoft the fees set forth on Exhibit C for the license of the Security Feature (the “Security Feature Fee” ). The Security Feature Fee is above and beyond the actual cost of the Security Chip that Company (or Approved Purchasers) will purchase from the Approved Vendor. In the event that Company purchases any Security Chips prior to the Effective Date, Company will pay the Security Feature Fee corresponding to such Security Chips within thirty (30) days after the Effective Date.

      (b) Wireless Feature Fee. For Wireless Licensed Products, Company will also pay Microsoft the fees set forth on Exhibit C for the license of the Wireless Feature (the “Wireless Feature Fee” ). The Wireless Feature Fee is above and beyond the actual cost of the Radio Device that Company (or Approved Purchasers) will purchase from the Approved Vendor. In the event that Company purchases any Radio Devices prior to the Effective Date, Company will pay the Wireless Feature Fee corresponding to such Radio Devices within thirty (30) days after the Effective Date.

      (c) Setup and Firmware Fees . Company will also pay Microsoft the applicable Setup and Firmware Fees identified in Exhibit C .

      5.2 Logo Royalties.

      (a) Logo Royalties . In consideration of the Xbox 360 Logo license rights granted Company for the Licensed Products, Company will pay to Microsoft the Xbox 360 Logo Royalties set forth on Exhibit C . The royalty obligation is triggered on the shipment of Licensed Product(s) to customers.

      (b) Royalty Reports and Payments. Company will make quarterly royalty reports to Microsoft within (i) forty-five (45) days after the end of each calendar quarter during the Term; (ii) fifteen (15) days after termination of this Agreement in the event there is no “Sell Off Period” as referenced in Section 15.3; or (iii) in the event there is a “Sell Off Period” as referenced in Section 15.4, within fifteen (15) days after the end of each calendar month during the Sell Off Period and a final report and payment within fifteen (15) days of the end of the Sell Off Period. The royalty report will include monthly sales information and be in a reasonable form as defined by Microsoft. For each calendar quarter, Company will remit payment(s) in accordance with Section 5.3 in United States Dollars at the same time as submission of the royalty report.

      5.3 Place of Payment. Microsoft will address invoices for fee and royalty payments owed by Company to:

The statements required pursuant to this Section will be delivered by Company to:

Payments will be sent via wire transfer in U. S. Dollars only to:

      5.4 Audit. During the Term and for a period of at least three (3) years thereafter, Company shall keep and maintain complete and accurate books and records relating to its performance (and any of its manufacturer’s performance) under this Agreement. Upon not less than fourteen (14) days advance written notice from Microsoft, Company shall make such books and records available for audit by Microsoft’s internal audit team or an independent certified public accounting firm (together with independent technical

personnel if and as reasonably required for such accountant to perform the audit) designated by Microsoft and approved by Company, which approval shall not be unreasonably withheld. Unless otherwise agreed by Microsoft and Company, any such audit shall be conducted during regular business hours, at Company’s principal place of business, not more frequently than once in any period of twelve (12) consecutive months and in a manner that does not unreasonably interfere with Company’s normal course of business. If any audit reveals an overpayment, then Company will receive a credit, in the amount of such overpayment, that will be applied only against future royalties payable under Section 5.2. If any audit reveals an underpayment, then Company will pay Microsoft the amount of the underpayment, together with interest as provided for in Section 5.5, within forty-five (45) days after the date of the auditor’s report. Further, if any audit reveals an underpayment of more than five percent (5%) of the royalties owed for the royalty periods subject to the audit, then Company will promptly reimburse Microsoft, upon request, for all costs and expenses reasonably incurred by Microsoft to conduct the audit.

      5.5 Delinquent Payment. Any license fee, royalty or other amount not paid when due and otherwise in accordance with this Section 5 shall bear interest at the rate of one percent (1%) per month or the highest rate permitted by applicable usury law, whichever is less, calculated on a daily basis and compounded on the first day of each calendar month, from the date due until the date received by Microsoft in accordance with Section 5.3. This Section 5.5 does not authorize late payments, and the payment of interest hereunder shall not be lieu of or prejudice any other right or remedy that Microsoft may have on account of Company’s failure to make any payment in accordance with this Section 5.

      5.6 Taxes. Company shall be responsible for the billing, collecting and remitting of sales, use, value added, and other comparable taxes due with respect to the exercise of the licenses granted in this Agreement and any other activities of Company and its subsidiaries under this Agreement (including, without limitation, the collection of revenues). Microsoft is not liable for any taxes (including, without limitation, any penalties or interest thereon) that Company or any of its subsidiaries is legally obligated to pay in connection with this Agreement, the exercise of any licenses granted in this Agreement or any other activities of Company and its subsidiaries under this Agreement. Company is not liable for any income taxes that Microsoft is legally obligated to pay with respect to any amounts paid to Microsoft by Company under this Agreement.

     All royalties and fees exclude any taxes, duties, levies, fees, excises or tariffs imposed on any of Company’s activities in connection with this Agreement. Company shall pay to Microsoft any applicable taxes that are owed by Company solely as a result of entering into this Agreement and which are permitted to be collected from Company by Microsoft under applicable law, except to the extent that Company provides to Microsoft a valid exemption certificate for such taxes. Company agrees to indemnify, defend and hold Microsoft harmless from any taxes (including, without limitation, sales or use taxes paid by Company to Microsoft) or claims, causes of action, costs (including, without limitation, reasonable attorneys’ fees) and any other liabilities of any nature whatsoever related to such taxes.

     If, after a determination by foreign tax authorities, any taxes are required to be withheld on payments made by Company to Microsoft, Company may deduct such taxes from the amount owed Microsoft and pay them to the appropriate taxing authority; provided, however, that Company shall promptly secure and deliver to Microsoft an official receipt for any such taxes withheld or other documents necessary to enable Microsoft to claim a U.S. Foreign Tax Credit. Company will make certain that any taxes withheld are minimized to the extent possible under applicable law.

     This tax section shall govern the treatment of all taxes arising as a result of or in connection with this Agreement notwithstanding any other section of this Agreement.

6. Product Review and Certification .

      6.1 Review of Proposed Product. Company will identify a single contact person for all business development activity relating to Proposed Products. Company will submit its plans for Proposed Products to Microsoft for review against Xbox 360 hardware and software game categories. Feedback

regarding the category fit of any Proposed Product may be provided by Microsoft in its sole discretion to maintain consistent and compatible Xbox 360 accessory products. Company’s plan for Proposed Products will be in writing, and will include at least (to the extent applicable): (a) detailed description of the design, technical and marketing suitability of the Proposed Product, (b) expected suggested retail pricing of the Proposed Product, (c) whether the Proposed Product is intended to result in a Wireless Licensed Product; and (d) estimated annual sales volumes by world region of the Proposed Product(s) based upon assumptions provided by Company.

      6.2 Authorization of Security Feature, Wireless Feature and Xbox 360 Chip(s). Upon Microsoft’s approval of the plan for each Proposed Product, Company may request sample Security Chips, Radio Devices (if the Proposed Product approved by Microsoft is intended to result in a Wireless Licensed Product), and Baseband Chips from the applicable