EXHIBIT 10.65
January 13, 2003
Interplay Entertainment Corp.
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Attention: Legal Department
Re: LETTER AGREEMENT AND AMENDMENT #5 (ASIA PACIFIC & AUSTRALIA) TO
VIDEO GAME DISTRIBUTION AGREEMENT DATED AUGUST 9, 2002.
Dear Sir or Madam:
This letter will serve as the fifth amendment ("AMENDMENT #5") to confirm
the agreements we have reached in connection with the Video Game Distribution
Agreement dated August 9, 2002, between Vivendi Universal Games, Inc. ("VUG")
and Interplay Entertainment Corp. ("INTERPLAY"), as amended by (i) that Letter
of Intent dated August 9, 2002 (the "LOI"), (ii) that Letter Agreement and
Amendment #2 dated August 29, 2002 ("AMENDMENT #2"), (iii) that Letter Agreement
and Amendment dated September 12, 2002 ("AMENDMENT #3"), and (iv) that Letter
Agreement and Amendment #4 (OEM & Back-Catalog) dated December 20, 2002
("AMENDMENT #4") (collectively, the "NEW DISTRIBUTION AGREEMENT"). The
provisions contained herein shall serve to amend the New Distribution Agreement
only as stated herein, and all other terms and conditions contained in those
agreements shall remain in full force and effect. All capitalized terms used
herein and not otherwise defined shall have the meaning ascribed to them in the
New Distribution Agreement.
1. ADDITION OF ASIA-PACIFIC AND AUSTRALIA/N.ZEALAND TERRITORIES. Subject to
the terms of this Amendment #5, SECTION 2 of EXHIBIT B of the New
Distribution Agreement is hereby amended to add the following territories
to VUG's Licensed Territory:
i. Australia and New Zealand (collectively, the "AUSTRALIA TERRITORY");
and
ii. Korea, Taiwan, Sri Lanka, Malaysia, Philippines, Thailand, Singapore,
Hong Kong, China, Indonesia, Vietnam, and India (collectively, the
"ASIA-PACIFIC TERRITORY"). (Note: Japan is excluded.)
Collectively, the Australia Territory and the Asia-Pacific Territory are
referred to as the "ROW TERRITORY".
2. PARTNER PRODUCT CLARIFICATION FOR ROW TERRITORY. For purposes of the ROW
Territory, "Partner Products" shall be deemed to include all Partner
Products if and to the extent that as of the date of this Amendment #5 no
third party already possesses such rights (or such party subsequently
waives such rights in their sole discretion). Accordingly, and for purposes
of clarification and without limitation, VUG's License in
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
the ROW Territory shall be subject to any agreements for the ROW Territory
that are in existence as of the date of this Amendment #5. Attached hereto
in EXHIBIT 1 are those Partner Products which are not subject to existing
agreements and to which VUG shall have distribution rights in the ROW
Territory.
3. AUTHORIZED CHANNEL AMENDED FOR ROW TERRITORY. Solely with respect to the
Asia-Pacific Territory, VUG's Authorized Channels of distribution (SECTION
1 of EXHIBIT B of the New Distribution Agreement) are hereby amended to add
the following:
"1.3 Internet Cafe, Game Rooms/Cyber-cafes, down-loading/electronic
distribution (provided, however, that VUG shall not have the right to
distribute/stream/download over the Internet any Partner Products (i) in
Korean language and which would violate***, and/or (ii) in English (i.e.,
that have not been localized for the ROW Territory)."
Such additional Authorized Channel in the Asia-Pacific Territory shall not
be deemed to violate Interplay's reservation of electronic transmission
rights under SECTION 2.6 of the New Distribution Agreement.
4. TERM. For purposes of clarification, the Term of VUG's License for the ROW
Territory shall coincide with the Term of the New Distribution Agreement.
5. VUG'S OEM RIGHTS UNMODIFIED. Notwithstanding the addition of the ROW
Territory to VUG's Licensed Territory, the Amendment #5 shall not amend
VUG's OEM Rights in any manner (e.g., VUG shall not have the right to now
enter into OEM Transactions directly with customers located in the ROW
Territory).
6. NO INITIAL SHIPMENT MINIMUM UNIT REQUIREMENT IN ROW TERRITORY. SECTION 12.5
shall not apply to the Partner Products with respect to the ROW Territory.
7. MANUFACTURING OF PARTNER PRODUCTS FOR DISTRIBUTION IN AUSTRALIA TERRITORY.
Notwithstanding anything to the contrary in the New Distribution Agreement,
VUG shall manufacture on behalf of Interplay the Partner Products to be
distributed in the Australia Territory (and title to all such Partner
Product units shall at all times remain with Interplay). Solely with
respect to distribution in the Australia Territory, VUG and Interplay shall
mutually agree in advance and in writing on the number of units of each PC
Partner Product and each Non-PC Partner Product that will be manufactured
in each manufacturing run of each such Partner Product; and Interplay
agrees that it will not unreasonably withhold, condition or delay such
approvals. Subject to reimbursement as provided below in PARAGRAPH 11.III,
VUG will pay all actual out-of-pocket costs of (i) manufacturing the
Partner Product units to be distributed in the Australia Territory,
including CD- and DVD-materials (and any other component materials) and
pressing, Game Hardware Platform Licensor royalties, packaging materials,
printing of packaging and inserts, and pack-out, (ii) assembly of
finished-goods Partner Product units (to the extent the Game Hardware
Platform Licensor allows VUG to, and VUG elects to,
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
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perform any such assembly), and (ii) shipping, and securing delivery of,
completed finished-goods units of the Partner Products to VUG's
distribution center (collectively, "ACTUAL MANUFACTURING COSTS").
Solely in the event that VUG is unable or otherwise prohibited by the
applicable Game Hardware Platform Licensor from fulfilling its
manufacturing obligations as described herein with respect to the Australia
Territory, Interplay shall, only to the extent and with the approval of
VUG, manufacture or cause to be manufactured all units of applicable
Partner Product Platform SKUs to be distributed by VUG in the Australia
Territory and for securing delivery of such Partner Product Platform SKUs
to VUG's distribution center, as directed by VUG. Subject to VUG's approval
and Interplay's consent to manufacture the specified number of units and
deliver same as stated herein, VUG will advance Interplay its Actual
Manufacturing Costs solely related to the Partner Product Platform SKUs to
be distributed by VUG in the Australia Territory. VUG will advance such
Actual Manufacturing Costs to Interplay, or at VUG's option pay such
amounts directly to any Game Hardware Platform Licensor and/or shipping
company performing such services or who is otherwise owed such payments,
promptly upon Interplay's presentation to VUG of a valid and correct
invoice or purchase order specifying the amount owed and the services being
provided. VUG shall have a right of prior approval (which will not be
unreasonably withheld or delayed) over the quantity of each manufacturing
order submitted to each Game Hardware Platform Licensor for such Partner
Product Platform SKUs intended for distribution in the Australia Territory.
By way of clarification, VUG will not be required to advance Interplay the
costs or expenses of manufacturing or shipping units of any Partner Product
Platform SKUs that are not intended for distribution by VUG in the
Australia Territory.
8. ROW TERRITORY MARKETING EXPENSES.
i. ASIA-PACIFIC TERRITORY. Solely with respect to the Asia-Pacific
Territory, VUG shall at a minimum allocate (and VUG shall spend): (i)
*** percent (***%) of Net Sales Revenue for direct out-of-pocket
marketing costs, and (ii) *** percent (***%) of Net Sales Revenue for
MDF/COOP expenses (and SECTION 6 of the New Distribution Agreement is
hereby amended accordingly with respect to the Asia Pacific
Territory).
ii. AUSTRALIA TERRITORY. Solely with respect to the Australia Territory,
VUG shall at a minimum allocate (and VUG shall spend): (i) *** percent
(***%) of Net Sales Revenue for direct out-of-pocket marketing costs,
and (ii) *** percent (***%) of Net Sales Revenue for MDF/COOP expenses
(and SECTION 6 of the New Distribution Agreement is hereby amended
accordingly with respect to the Australia Territory).
9. TIMELY RELEASE OF PARTNER PRODUCTS IN ROW TERRITORY.
i. ASIA-PACIFIC TERRITORY. Solely with respect to the Asia-Pacific
Territory, VUG shall commercially release each Partner Product within
*** days (subject to extension for any delay caused by the applicable
Game Hardware Platform Licensor with respect to
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
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a Non-PC Partner Product) following receipt from Interplay of a final
localized version of such Partner Product in accordance with PARAGRAPH
10 below.
ii. AUSTRALIA TERRITORY. Solely with respect to the Australia Territory,
VUG shall commercially release each Partner Product in the Australia
Territory within *** days after the date VUG is required to release
such Partner Product in the United States pursuant to the terms of
SECTION 3.4 of the New Distribution Agreement. In the event that VUG
manufactures through Interplay (in accordance with paragraph 7 above)
a Partner Product for the Australia Territory, and in the event that
finished goods of such Partner Product are not completed and made
available to VUG within *** days following Virgin Interactive
Entertainment's international release of such Partner Product, then
VUG shall have the right to withhold from the Interplay Proceeds with
respect to any other Partner Products under the New Distribution
Agreement, as amended hereby, an amount equal to ***. By way of
clarification, such withholding of ***, if any, shall not be deemed in
any way to alter, modify or amend VUG's continuing distribution rights
and obligations to such Partner Product.
10. LOCALIZATION FOR ASIA-PACIFIC TERRITORY.
With respect to VUG's distribution of the Partner Products in the
Asia-Pacific Territory, Interplay shall deliver PC Partner Product assets
(double byte enabled, IME enabled and compatible with Asian Windows OS
(Windows 98SE and later)) for the Three Month Evaluation in accordance with
the New Distribution Agreement. VUG shall be solely responsible at its cost
for localizing Partner Product assets, and Interplay to be solely
responsible at its cost for incorporating such localized assets into the
Partner Product. Interplay will use its best efforts to deliver to VUG the
Partner Product with incorporated localized assets within a reasonable time
following receipt of the localized assets from VUG. Following receipt of
such localized Partner Product, VUG shall be responsible at its cost for QA
testing of the localized Partner Product, and Interplay shall, within a
commercially reasonable time after receiving notice thereof from VUG, make
any necessary fixes to the localized Partner Product relating to
incorporation. A localized version of a PC Partner Product approved by VUG
and a localized version of a Non-PC Partner Product approved by the
applicable Game Hardware Manufacturer Licensor shall be deemed an "APPROVED
LOCALIZED PARTNER PRODUCT")
VUG hereby represents and warrants to Interplay that (i) all localized
assets shall, as between VUG and any third-party subcontractor performing
such localization on VUG's behalf, be owned exclusively by VUG, and (ii)
all localized assets shall remain unencumbered, and (iii) subject to
Interplay's representations and warranties under the New Distribution
Agreement with respect to the Partner Products, no such localized assets
shall infringe the rights of any third party. VUG shall indemnify Interplay
for any and all liabilities, damages costs and fees (including reasonable
attorney's fees) for any third party claims or actions arising out of or
relating to any breach of the foregoing representations and warranties.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
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Solely by way of clarification, Interplay shall be responsible (at its own
cost and expense) for all submissions and approvals to the various Game
Hardware Platform Licensors with respect to all localized Non-PC Partner
Products.
Upon expiration of the Term (and any applicable Sell-Off Period) or earlier
termination by Interplay of the New Distribution Agreement, as amended by
this Amendment #5, Interplay exclusively shall own all of the localized
assets created by/for VUG and incorporated into the Partner Products.
11. NEW MINIMUM GUARANTEE AND INTERPLAY PROCEEDS CALCULATIONS FOR ROW
TERRITORY. The following provisions shall be added to SECTION 4 of EXHIBIT
B:
"ROW TERRITORY MINIMUM GUARANTEE AND INTERPLAY PROCEEDS CALCULATIONS:
i. ROW TERRITORY MINIMUM GUARANTEE. VUG shall, immediately upon the
complete execution of this Amendment #5, pay Interplay a
non-refundable (except as otherwise provided in the New Distribution
Agreement) Minimum Guarantee with respect to the ROW Territory in the
amount of ***(the "ROW TERRITORY MINIMUM GUARANTEE). Interplay
expressly acknowledges and agrees that such ROW Territory Minimum
Guarantee shall be in lieu of any other minimum guarantees with
respect to any Partner Products in the ROW Territory. By way of
clarification, Interplay shall not be entitled to any guarantees based
on projected sales with respect to the ROW Territory.
ii. CALCULATION OF INTERPLAY PROCEEDS FOR ASIA-PACIFIC TERRITORY.
Notwithstanding anything to the contrary in the New Distribution
Agreement, VUG shall pay Interplay Proceeds with respect to
distribution of Partner Products in the Asia-Pacific Territory as
follows: ***
iii. CALCULATION OF INTERPLAY PROCEEDS FOR AUSTRALIA TERRITORY.
Notwithstanding anything to the contrary in the New Distribution
Agreement but subject to VUG's right of recoupment, VUG shall pay
Interplay Proceeds with respect to distribution of the Partner
Products in the Australia Territory as follows: Gross Sales Revenues,
less (i) the General Reserve (as defined in the New US Distribution
Agreement, except that such General Reserve shall be fixed at ***% for
both PC Partner Products and Non-PC Partner Products), (ii) a ***%
distribution fee (calculated on Net Sales) payable to VUG for its
services hereunder (the "DISTRIBUTOR FEE"), and (iii) VUG's Actual
Manufacturing Costs and Capped Marketing Costs (as defined below). ***
iv. The parties hereby agree that, notwithstanding anything to the
contrary herein, VUG shall pay royalties to Interplay at the following
***rates (i.e., VUG shall be solely responsible for all costs
associated with the manufacturing, marketing and distribution of such
"back-catalog" products (e.g., Interplay shall not be responsible for
manufacturing costs associated with "back-catalog" products in
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
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the Australia Territory) and VUG shall not take any deductions from
Interplay's per-unit royalty):
China: ***
Asia-Pacific Territory (excluding China): ***
Australia Territory: ***
The remainder of SECTION 4 of EXHIBIT B shall be unchanged in all
aspects.
12. RECOUPMENT OF ROW TERRITORY MINIMUM GUARANTEE. SECTION 1.3 of EXHIBIT A and
SECTION 20.14 are modified as follows solely with respect to the ROW
Territory:
i. RECOUPMENT. Notwithstanding anything to the contrary in the New
Distribution Agreement, the ROW Territory Minimum Guarantee shall be
recoupable from ROW Territory Interplay Proceeds, and as follows:
unless and until VUG recoups the ROW Territory Minimum Guarantee, VUG
shall be entitled to deduct ***from the ROW Territory Interplay
Proceeds.
13. GOOD FAITH EFFORTS. VUG and Interplay agree to work together in good faith
to carry out the intent of this Amendment #5, and the parties shall work
together to modify any remaining provisions of the New Distribution
Agreement to the extent reasonably necessary for purposes of VUG's
distribution of the Partner Products in the ROW Territory.
If you agree to the provisions set forth in this letter agreement, please so
indicate by signing the enclosed copy and returning it to me via facsimile,
followed by an original copy in the mail. As stated herein, nothing contained in
this letter shall affect the terms and conditions stated in the New Distribution
Agreement, except as specifically stated herein.
Sincerely yours,
/s/ Xxxx X'Xxxx
-----------------------------------
Xxxx X'Xxxx
President, Partner Publishing Group
Vivendi Universal Games, Inc.
I agree to the provisions of this letter agreement.
1/13/03 /s/ Herve Caen
Dated: ________________ ____________________________________
Name: Herve Caen
Title: Chief Executive Officer
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
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Exhibit 1
ROW Territory Partner Products
Title: Platform: Territory: Allocated Minimum Guarantee
Australia Asia-Pacific
Territory Territory
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
*** *** *** $*** $***
Total: $*** $***
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
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Exhibit 2
***
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
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