Xbox Publisher License Agreement

CONFIDENTIAL


EXHIBIT 10.52


Confidential information omitted where indicated by "[*]" and filed separately with the Securities Exchange Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933.


MICROSOFT LICENSING, INC.
XBOX(TM) PUBLISHER LICENSE AGREEMENT


This License Agreement (the "Agreement") is entered into and effective as of July 22, 2002 (the "Effective Date") by and between MICROSOFT LICENSING, INC., a Nevada corporation ("Microsoft"), and THE 3DO COMPANY, a California corporation ("Licensee").


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, Licensee is an experienced publisher of software products that wishes to develop and/or publish one or more software products running on the Xbox game system, and to license proprietary materials from Microsoft, on the terms and conditions set forth herein.


C. 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


For the purposes of this Agreement, the following terms will have the respective indicated meanings:


1.1 "Authorized Replicator" shall mean a software replicator certified and approved by Microsoft for replication of Finished Product Units that run on Xbox.


1.2 "Branding Specifications" shall mean the specifications and such other design specifications as Microsoft may hereafter provide from time to time, for using the Licensed Trademarks on a Software Title and/or on Marketing Materials as set forth in the Xbox Guide.


1.3 "Break The Seal" or "BTS" shall mean a Microsoft designed sticker that will be issued to the Authorized Replicator for placement on the Packaging Materials as specified in the Xbox Guide. A BTS shall be assigned to each Finished Product Unit that has been manufactured by an Authorized Replicator.


1.4 "Certification" shall mean the final stage of the approval process following Pre-Certification wherein Licensee shall deliver its proposed final version of the Software Title and Microsoft shall approve or disapprove of such Software Title for distribution. Certification is further defined in this Agreement and the Xbox Guide.


1.5 "Commercial Release" shall mean (a) with respect to Xbox, the first distribution of an Xbox in the United States to the public for payment, and (b) with respect to a Software Title, the earlier of the first distribution of the Software Title for payment or distribution of Finished Product Units that are not designated as beta or prerelease versions.


1.6 "Concept" shall mean the details of Licensee's proposed Software Title including content and technical characteristics, target market, proposed release date and development schedule. Concept is further defined in this Agreement and the Xbox Guide.


1.7 "Demo Versions" shall mean a small portion of an applicable Software Title that is provided to end users to advertise or promote a Software Title. Subject to the terms of the Xbox Guide, a Demo Version(s) may be distributed on FPU for other Software Titles. Additionally a Demo Version may be placed on a single FPU either as a stand-alone or with


* Confidential portion omitted and filed separately with the Commission.


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other Demo Versions for distribution to end users, provided that Microsoft shall have prior approval over the number of units manufactured and the price of such units shall be free or at a suggested retail price not to exceed [*].


1.8 "Finished Product Unit" or "FPU" shall mean a Software Title in object code form that has been affixed to a DVD disk, has passed Certification, and has been approved for distribution by Microsoft. Once the BTS has been assigned or affixed to a FPU or its packaging, the FPU shall also include its accompanying BTS.


1.9 "Licensed Trademarks" shall mean the Microsoft trademarks identified in the Xbox Guide (that Microsoft unilaterally may modify from time to time during the Term of this Agreement upon written notice to Licensee).


1.10 "Marketing Materials" shall collectively mean the Packaging Materials and the Promotional Materials.


1.11 "Packaging Materials" shall mean 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, Finished Product Unit media label, and any promotional inserts and other materials that are to be included in the retail packaging.


1.12 "Promotional Materials" shall mean press releases, marketing, advertising or promotional materials related to the Software Title and/or Finished Product Units (including without limitation web advertising and Licensee's web pages to the extent they refer to the Software Title(s) or the Finished Product Units) that will be used by Licensee in the marketing of the Software Titles or FPU.


1.13 "Pre-Certification" shall mean the first required stage of the approval process wherein Microsoft conducts gameplay and technical screen tests to provide feedback and/or identify any issues that may prevent the Software Title from being approved during the Certification phase. Pre-Certification is further defined in this Agreement and the Xbox Guide.


1.14 "Software Title" shall mean the single software product as described in the applicable Concept submission form that Licensee proposes to publish for use on Xbox. A Software Title shall include the improvements and patches thereto (if and to the extent approved by Microsoft), but shall not include any "prequel" or "sequel." If Microsoft approves one or more additional Concept(s) for another single software product proposed by Licensee to run on Xbox, this Agreement, and the term "Software Title," shall be broadened automatically to cover the respective new software product as an additional Software Title under this Agreement.


1.15 "Territory" shall be determined on a Software Title-by-Software Title basis, and shall mean such geographic region(s) as may be specified in writing by Microsoft when the Concept of the applicable Software Title is approved.


1.16 "Xbox" shall mean the first version (as of the Commercial Release) of Microsoft's Xbox game system, including operating system software and hardware design specifications.


1.17 "Xbox Guide" shall mean a document (in physical, electronic or website form) created by Microsoft that supplements this Agreement and provides detailed requirements regarding: the approval process, Branding Specifications, replication requirements, royalty payment process, marketing guidelines, technical specifications, Demo Version requirements and packaging requirements. Microsoft may supplement, update and amend the Xbox Guide from time to time in its reasonable discretion as set forth in this Agreement.


2. DEVELOPMENT; DELIVERY; APPROVAL


2.1 Xbox Development Kit License. Contemporaneous with the execution of this Agreement, Licensee shall enter into one or more development kit license(s) (each an "XDK License") pursuant to which Microsoft or its affiliate may license to Licensee software development tools and hardware to assist Licensee in the development of Software Titles, including redistributable code that Licensee shall incorporate into Software Titles, on such terms and conditions as are contained in the XDK License. The terms of the XDK License are incorporated herein by reference.


2.2 Xbox Guide. Licensee agrees to be bound by all provisions contained in the then-applicable version of the "Xbox Guide," the current version of which Microsoft or its affiliate will deliver to Licensee upon its completion. Licensee understands and agrees that Microsoft may, in its discretion, supplement, revise and update the Xbox Guide from time to time and that upon Licensee's receipt of the applicable supplement, revision or updated version, and subject to Section 2.4.4, Licensee automatically shall be bound by all provisions of the then-current Xbox Guide; Microsoft will specify in each such


* Confidential portion omitted and filed separately with the Commission.


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supplement, revision or updated version a reasonable effective date of each change if such change or revision is not required to be effective immediately.


2.3 Approval Process. The approval process is divided into four phases comprised of Concept approval, Pre-Certification, Certification and Marketing Materials approval. Licensee is required to submit its Software Title to Microsoft for evaluation of all four phases. Each phase is identified below and further defined in the Xbox Guide.


2.3.1 Concept. Licensee shall deliver to Microsoft a completed Concept submission form (in the form provided by Microsoft to Licensee) that describes the Software Title. Evaluation of the proposed Software Title design will be based on criteria including, but not limited to, the following: (i) originality; (ii) play breadth and depth; (iii) playability; (iv) replayability and long-term interest; (v) theme, characters, storyline (vi) suitability to the target demographic; (vii) release date; and (viii) overall fit with the Xbox product portfolio.


2.3.1.1 If acceptable to Microsoft, following evaluation,
Microsoft shall provide Licensee with a "Concept Summary" that
describes the approved Concept. The parties shall execute the Concept
Summary to signify agreement with the description of the Concept. The
Concept Summary shall be incorporated herein by reference and adherence
to its terms shall be one of the bases for the grant of Certification.


2.3.2 Pre-Certification Version. At the Pre-Certification submission, Licensee shall deliver to Microsoft a version of the Software Title, that includes all current features of the Software Title and such other content as may be required under the Xbox Guide. Upon receipt, Microsoft shall conduct technical screen and/or other testing consistent with the Xbox Guide and will subsequently provide Licensee with advisory feedback regarding such testing. Licensee acknowledges that the Pre-Certification and Certification submissions evaluate different aspects of the Software Title and therefore satisfactory feedback regarding Pre-Certification is not an indication that the Software Title will be approved following the Certification submission.


2.3.3 Certification. Licensee shall deliver to Microsoft Licensee's proposed final release version of the applicable Software Title that is complete and ready for manufacture and commercial distribution. Such version shall provide the final content rating certification (e.g. ESRB, ELSPA) with identified program errors corrected, and with any and all changes previously requested by Microsoft implemented. Microsoft shall conduct compliance, compatibility, functional and other testing consistent with the Xbox Guide ("Certification Testing") and shall subsequently provide Licensee with the results of such testing.


2.3.3.1 Certification for a Software Title may be granted
based upon (1) successful completion of the Certification Testing; (2)
conformance with the approved Concept as identified in the Concept
Summary; (3) consistency with the goals and objectives of the Xbox
console platform; and (4) compliance with other requirements as set
forth in this Agreement.


2.3.3.2 Resubmissions. If warranted on the basis of its tests,
Microsoft shall make reasonable efforts to provide Licensee with
feedback regarding the Software Title and modifications that must be
made prior to approval of the Certification submission. Provided that
Licensee has made good faith efforts to address issues raised by
Microsoft, Licensee shall be given the opportunity to resubmit Software
Titles that fail the Certification approval process. In Microsoft's
discretion, Licensee may be charged a reasonable fee designed to offset
the costs associated with the testing of Software Titles upon
resubmission. In the event of a second submission, Microsoft reserves
the right to assign a new release date for the Software Title.


2.3.3.3 Licensee shall not distribute the Software Title, nor
manufacture any FPU intended for distribution, unless and until
Microsoft shall have given its approval of the Certification version of
the Software Title and both parties have approved of the FPU as set
forth in Section 5 of this Agreement.


2.3.4 Marketing Materials Approval. Licensee shall submit all Packaging Materials and Marketing Materials to Microsoft, and Licensee shall not distribute such Marketing Materials (as a component of the Software Title, Finished Product Unit or otherwise) unless and until Microsoft has approved them in writing. Prior to publication of any Marketing Materials, Licensee agrees to incorporate all changes relating to use of the Licensed Trademarks that Microsoft may reasonably request, and will use its commercially reasonable efforts to incorporate other changes reasonably suggested by Microsoft (provided, however, that Licensee shall at all times comply with the requirements set forth in the Xbox Guide).


* Confidential portion omitted and filed separately with the Commission.


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2.4 Other Approval Considerations.


2.4.1 Other Versions. The parties may mutually agree that Licensee submit versions of the Software Title 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.


2.4.2 Content Rating. For those Territories that utilize a content rating system, Microsoft will not grant final Certification approval to a Software Title unless and until Licensee shall have obtained, at Licensee's sole cost, a rating not higher than "Mature (17+)" or its equivalent from the appropriate rating bodies for the applicable Territory (such as, ESRB, ELSPA, etc.) and/or any and all other independent content rating authority/authorities reasonably designated by Microsoft. Licensee shall make any changes to the Software Title required to obtain a rating not higher than "Mature (17+)" (or its equivalent). In no event shall Licensee distribute any Software Title under an "Adults Only" or higher (or equivalent) rating. Licensee shall include the applicable rating(s) prominently on Finished Product Units, in accordance with the applicable rating body guidelines. For those Territories that do not utilize a content rating system (e.g. Japan), Microsoft shall not approve any Software Title that, in its opinion, contains excessive sexual content or violence, inappropriate language or other elements deemed unsuitable for the Xbox console platform.


2.4.3 Demo Versions. Unless separately addressed in the Xbox Guide, all rights, obligations and approvals set forth in this Agreement as applying to Software Titles shall separately apply to its Demo Version. Demo Versions may not be distributed by Licensee until granted Certification approval by Microsoft.


2.4.4 Changes of Requirements by Microsoft. Licensee acknowledges that the Xbox Guide is an evolving document and subject to change during the Term of this Agreement. Notwithstanding the prospect of such change, Microsoft agrees that except in circumstances where (a) such change is deemed vitally important to the success of the Xbox platform (e.g. changes due to piracy, technical failure) or (b) such change will not add significant expense to the Software Title's development, then (i) after completion of the Pre-Certification by Microsoft, Licensee will not be obligated to comply, with respect to such Software Title only, with any subsequent changes made by Microsoft to the technical or content requirements for Software Titles in the Xbox Guide; and (ii) subject to the immediately preceding clause any changes made by Microsoft in Branding Specifications or other Marketing Materials requirements after final Certification of a Software Title by Microsoft will be effective as to such Software Title only on a "going forward" basis (i.e., only to such Marketing Materials and/or Finished Product Units as are manufactured after Microsoft notifies Licensee of the change).


2.4.4.1 Notwithstanding the foregoing (i) and (ii), Licensee
shall comply with such changes to the Xbox Guide in the event Microsoft
agrees to pay for Licensee's direct, out-of-pocket expenses necessarily
incurred as a result of its retrospective compliance with the change.


2.4.5 Notwithstanding Microsoft's Certification of a Software Title, 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), and Licensee agrees to correct such material bugs and errors as soon as possible after discovery (provided that, with respect to bugs or errors discovered after Commercial Release of the applicable Software Title, Licensee will use commercially reasonable efforts to correct the bug/error in all Finished Product Units manufactured after discovery). Licensee shall perform its own testing of the Software Title and Finished Product Units and shall keep written or electronic records of such testing during the Term of this Agreement and for no less than two (2) years thereafter ("Test Records"). Upon Microsoft's request, Licensee shall provide Microsoft with copies of or reasonable access to inspect the Test Records, Finished Product Units and Software Title (either in pre-release or commercial release versions, as Microsoft may request).


2.4.6 Compliance With Xbox Guide. In the event that Microsoft determines, at any time prior to the Commercial Release of a Software Title, that such Software Title does not materially comply with the requirements set forth in the Xbox Guide, then Microsoft will have the right to terminate this Agreement (subject to any applicable cure provisions contained herein), without cost or penalty, upon written notice to Licensee solely with respect to such Software Title, in Microsoft's sole discretion and notwithstanding any prior approvals given by Microsoft pursuant to this Section.


3. GRANT OF DISTRIBUTION LICENSE, LIMITATIONS


3.1 Distribution License.


* Confidential portion omitted and filed separately with the Commission.


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3.1.1 Upon Certification of the Software Title, approval of the Marketing Materials and the FPU test version of the Software Title (as hereafter described) by Microsoft and subject to the terms and conditions contained within this Agreement and the XDK License, Microsoft grants Licensee a non-exclusive, non-transferable, license to distribute Software Titles containing Redistributable and Sample Code (as defined in the XDK License) and Security Technology (as hereafter defined) within the Territory in FPU form to third parties for distribution to end users and/or directly to end users.


3.1.2 The license to distribute the Software Product is personal to Licensee and except for transfers of FPU through normal channels of distribution (e.g. wholesalers, retailers) who will in turn transfer such product to end users, absent the written approval of Microsoft, Licensee may not sublicense or assign its rights under this license to other parties. For the avoidance of doubt, without the written approval of Microsoft, Licensee may not sublicense, transfer or assign its right to distribute Software Titles or FPU to another entity that will brand, co-brand or otherwise assume control over such products as a "publisher" as that concept is typically understood in the console game industry, except under the following conditions: (1) the Sub-publisher has signed a PLA and both Licensee and Sub-publisher are and remain at all times in good standing under each of their respective PLAs; (2) each Software Title over which Sub-publisher acquires publishing rights shall be deemed a "Software Title" for purposes of both Licensee's and Sub-publisher's PLAs, and Microsoft shall have full right and authority to enforce its rights with respect to the Software Title(s) against either or both Licensee and Sub-publisher; (3) Licensee shall be responsible for making applicable royalty payments for the FPUs for which it places manufacturing orders, and Sub-publisher shall be responsible for making royalty payments for the FPUs for which it places manufacturing orders; provided that Licensee shall be liable to Microsoft for any failure by Sub-publisher to make royalty payments or otherwise comply with the duties and obligations under the PLA; (4) the royalty table set forth in Section 6.1 of the PLA shall apply to FPUs on an aggregate basis, regardless of whether Licensee or Sub-publisher is responsible for the manufacturing and royalty payments therefore, and Microsoft shall be entitled to share manufacturing information relating to the Software Title(s) among both Licensee and Sub-publisher in furtherance of this subsection (4); and (5) Microsoft's receipt, upon the earlier of (i) the effective date of the agreement between Licensee and Sub-publisher, or (ii) sixty (60) days prior to authorizing Sub-publisher to manufacture any Software Title(s), of written notice of the sub-publishing relationship, which notice shall also include confirmation by Licensee that the foregoing conditions have been met, along with a summary of the scope and nature of the sub-publishing relationship with Sub-publisher including, without limitation, as between Licensee and Sub-publisher, which party will be responsible for Certification of the Software Title(s), a list of the Software Title(s) for which Sub-publisher has acquired publishing rights, the Territory(ies) for which such rights were granted, and the term of Licensee's agreement with Sub-publisher.


3.2 EULA and End User Rights. As set forth in the Xbox Guide, Microsoft may require that Licensee distribute (directly or indirectly) the Software Title to end users subject to an end user license agreement ("EULA") in a form to be approved by Microsoft. Microsoft will have the right to modify its requirements for the EULA at any time, in its discretion and Licensee shall implement, at its sole cost, all such new requirements as soon as reasonably possible after receiving written notice from Microsoft of such required modifications. Licensee may only grant end users the right to make personal, non-commercial use of Software Titles. Provided that Microsoft has approved of private network play in the Concept Summary, Licensee may grant end users the right to use Software Titles over a private network utilizing a Microsoft licensed "System Link Cable" that connects multiple Xbox's provided that each end user is the lawful possessor of a lawfully made copy of the Software Title, the use is noncommercial in nature and otherwise complies with requirements found in the Xbox Guide.


3.3 No Electronic Transmission; No Online Activities. As of the Effective Date, Microsoft is exploring several options for the use of Xbox for online gameplay. Until such time as Microsoft grants Licensee online rights by a separate license agreement, Licensee may not broadcast, transmit, allow users to access, or otherwise distribute Software Titles by any means of electronic transmission, including, but not limited to, online gameplay or multiplayer.


3.4 No Distribution Outside the Territory. Licensee shall distribute Finished Product Units only in the Territory. Licensee shall not directly or indirectly export any Finished Product Units from the Territory nor shall Licensee knowingly permit or assist any third party in doing so, nor shall Licensee distribute Finished Product Units to any person or entity that it has reason to believe may re-distribute or sell such Finished Product Units outside the Territory.


3.5 No Reproduction of Finished Product Units Except by Microsoft or Authorized Replicators. Licensee acknowledges that this Agreement does not grant Licensee the right to reproduce or otherwise manufacture Finished Product Units itself, or on its behalf, other than through Microsoft or an Authorized Replicator. Licensee must use Microsoft or an Authorized Replicator to produce Finished Product Units, pursuant to Section 5.


* Confidential portion omitted and filed separately with the Commission.


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3.6 No Reverse Engineering. Licensee may utilize and study the design, performance and operation of Xbox solely for the purposes of developing the Software Title. Notwithstanding the foregoing, Licensee shall not, directly or indirectly, reverse engineer or aid or assist in the reverse engineering of all or any part of Xbox 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. In addition to any other rights and remedies that Microsoft may have under the circumstances, Licensee shall be required in all cases to pay royalties to Microsoft in accordance with Section 7 below with respect to any games or other p ...