Call Of Duty: Finest Hour - The Contract
January 12, 2007
Page 7 of 15
Tom: The
return reserve is set at 20% of each quarterly statement and paid out
after a 12 month (4 quarter) period (11.3). Spark also was to receive
a 10% passive royalty on any ports of the Games by any other developer,
subject to the same recoupment (11.4). Spark also received passive 10%
royalties on any non-software ancillary products such as books, comics,
movies, lunchboxes, action figures based on their original IP in the
Game, except for hint books and strategy guides (11.5). Hint books and
Strategy guides also yield a 10% passive royalty to Spark, provided
that they assist and cooperate in the creation of such materials (11.6).
Tom: For
purposes of Spark’s royalties, retail sales by Activision will be
booked when invoiced (11.7), license revenue will be booked to Spark’s
royalty account on actual receipt (11.8), foreign sales are credited
at the then current exchange rate and booked when received (11.9).
Spark is responsible for any tax on its royalties (11.10). If their
Game is packaged with other Activision games, the proportionate royalty
attributable to Spark’s Game will be based a ratio determined by the
initial retail price of the games packaged together (11.11). There is
no royalty due on promotional copies of the Game distributed fee of
charge or inventory clearance if discounted to less than 40% of the
initial retail price (11.12).
Chris & Dave:
The inventory clearance clause greatly favors Activision. The better
approach for Spark would be for Activision to pay royalties on the
discounted price, as long as that price exceeds the cost of the goods.
Tom: Payments.
Royalty statements are due 60 days after the end of each quarter along
with any payment due, less appropriate deductions and recoupment
(12.1). Developer Audit are limited to once a year and for a period of
12 months after each statement on 15 days notice at developer’s expense.
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