SONY COMPUTER ENTERTAINMENT AMERICA INC.
AND
CONSPIRACY ENTERAINMENT
[LOGO](R) SONY PLAYSTATION
PLAYSTATION(R)2
CD-ROM/DVD-ROM
LICENSED PUBLISHER AGREEMENT
Confidential
TABLE OF CONTENTS
SECTION: PAGE:
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1. DEFINITION OF TERMS 1
2. LICENSE GRANT 3
3. DEVELOPMENT OF LICENSED PRODUCTS 3
4. LIMITATIONS ON LICENSES; RESERVATION OF RIGHTS 4
5. QUALITY STANDARDS FOR THE LICENSED PRODUCTS 5
6. MANUFACTURE OF THE LICENSED PRODUCTS 7
7. MARKETING AND DISTRIBUTION 10
8. ROYALTIES 12
9. REPRESENTATIONS AND XXXXXXXXXX 00
00. INDEMNITIES; LIMITED LIABILITY 16
11. SCEA INTELLECTUAL PROPERTY RIGHTS 17
12. INFRINGEMENT OF SCEA INTELLECTUAL PROPERTY
RIGHTS BY THIRD PARTIES 18
13. CONFIDENTIALITY 18
14. TERM AND XXXXXXXXXXX 00
00. EFFECT OF EXPIRATION OR TERMINATION 22
16. MISCELLANEOUS PROVISIONS 23
Confidential
PLAYSTATION' 2
CD-ROM/DVD-ROM
LICENSED PUBLISHER AGREEMENT
This LICENSED PUBLISHER AGREEMENT (the "Agreement" or 'TPA"), entered into as of
the 28th day of August, 2000 (the "Effective Date"), by and between SONY
COMPUTER ENTERTAINMENT AMERICA INC., with offices at 000 X. Xxxxxxxxx Xxxxxxxxx,
Xxxxxx Xxxx, XX 00000 (hereinafter "SCEA"), and Conspiracy Entertainment, with
offices at 000 Xxxxx Xxxxxx Xxxx., Xxxxx Xxxxxx, XX 00000 (hereinafter
Publisher").
WHEREAS, SCEA, its parent company, Sony Computer Entertainment Inc., and/or
certain of their affiliates and companies within the group of companies of which
any of them form a part (collectively referred to herein as "Sony") are
designing and developing, and licensing core components of, a computer
entertainment system known as the PlayStation(R)2 computer entertainment system
(hereinafter referred to as the "System").
WHEREAS, SCEA has the right to grant licenses to certain SCEA Intellectual
Property Rights (as defined below) in connection with the System.
WHEREAS, Publisher desires to be granted a non-exclusive license to publish,
develop, have manufactured, market, distribute and sell Licensed Products (as
defined below) pursuant to the terms and conditions set forth in this Agreement;
and SCEA is willing, on the terms and subject to the conditions of this
Agreement, to grant Publisher such a license.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Publisher and SCEA
hereby agree as follows:
1. Definition of Terms.
1.1 "Advertising Materials" means any advertising, marketing, merchandising,
promotional, public relations (including press releases) and display materials
relating to or concerning Licensed Products or proposed Licensed Products, or
any other advertising, merchandising, promotional, public relations (including
press releases) and display materials depicting any of the Licensed Trademarks.
For purposes of this Agreement, Advertising Materials include any advertisements
in which the System is referred to or used in any way, including but not limited
to giving the System away as prizes in contests or sweepstakes and the public
display of the System in product placement opportunities.
1.2 "Affiliate of SCEA" means, as applicable, either Sony Computer
Entertainment Inc. in Japan, Sony Computer Entertainment Europe Ltd. in the
United Kingdom or such other Sony Computer Entertainment entity as may be
established from time to time.
1.3 "Designated Manufacturing Facility" means a manufacturing facility or
facilities which is designated by SCEA in its sole discretion to manufacture
Licensed Products and/or their component parts, which may include manufacturing
facilities owned and operated by affiliated companies of SCEA.
1.4 "Development System Agreement" means an agreement entered into between
SCEA and a Licensed Publisher, Licensed Developer or other licensee for the sale
or license of Development Tools.
1.5 "Development Tools" means the PlayStation 2 development tools sold or
licensed by SCEA to a Licensed Publisher or Licensed Developer for use in the
development of Executable Software for the System.
1.6 "Executable Software" means software which includes Product Software and
any software provided directly or indirectly by SCEA or an Affiliate of SCEA
designed for execution exclusively on the System and which has the ability to
communicate with the software resident in the System.
1.7 "Fiscal Year" means a year measured from April 1 to March 31.
1.8 "Generic Line" means the generic legal attribution line used on SCEA
marketing or other materials, which shall be or be substantially similar to the
following: "Product copyright and trademarks are the property of the respective
publisher or their licensors".
1.9 "Guidelines" shall mean any guidelines of SCEA or an Affiliate of SCEA
with respect to SCEA Intellectual Property Rights, which may be set forth in the
SourceBook 2 or in other documentation provided by SCEA or an Affiliate of SCEA
to Publisher.
1.10 "Legal Copy" means any legal or contractual information required to be
used in connection with a Licensed Product or Product Information, including but
not limited to copyright and trademark attributions, contractual credits and
developer or distribution credits.
1.11 "Level 1 Rebate" shall have the meaning set forth in Section 8.4 hereto.
1.12 "Level 2 Rebate" shall have the meaning set forth in Section 8.4 hereto.
1.13 "Licensed Developer" means any developer that has signed a valid and
than current Licensed Developer Agreement.
1.14 "Licensed Developer Agreement" or "LDA" means a valid and current
license agreement for the development of Licensed Products for the System, fully
executed between a Licensed Developer and SCEA or an Affiliate of SCEA.
1.15 "Licensed Products" means the Executable Software (which may be combined
with Executable Software of other Licensed Publishers or Licensed Developers),
which shall consist of one product developed for the System or for the original
PlayStation game console per Unit, in final form developed exclusively for the
System. Publisher shall have no right to package or bundle more than one product
developed for the System or for the original PlayStation game console in a
single Unit unless separately agreed with SCEA.
1.16 "Licensed Publisher" means any publisher that has signed a valid and
then current Licensed Publisher Agreement.
1.17 "Licensed Publisher Agreement" or "LPA" means a valid and current
license agreement for the publication, development, manufacture, marketing,
distribution and sale of Licensed Products for the System, fully executed
between a Licensed Publisher and SCEA or an Affiliate of SCEA.
1.18 "Licensed Territory" means the United States (including its possessions
and territories) and Canada. The Licensed Territory may be modified and/or
supplemented by SCEA from time to time pursuant to Section 4.4 below.
1.19 "Licensed Trademarks" means the trademarks, service marks, trade dress,
logos and other icons or indicia designated by SCEA in the SourceBook 2 or other
Guidelines for use on or in connection with Licensed Products. Nothing contained
in this Agreement shall in any may grant Publisher the right to use the
trademark "Sony" in any manner. SCEA may amend such Licensed Trademarks from
time to time in the SourceBook 2 or other Guidelines or upon written notice to
Publisher.
1.20 "Manufacturing Specifications" means specifications setting forth terms
relating to the manufacture and assembly of PlayStation 2 Format Discs,
Packaging, Printed Materials and each of their component parts, which shall be
set forth in the SourceBook 2 or other documentation provided by SCEA or a
Designated Manufacturing Facility to Publisher and which may be amended from
time to time upon reasonable notice to Publisher.
1.21 "Master Disc" means a recordable CD-ROM or DVD--ROM disc in the form
requested by SCEA containing final pre-production Executable Software for a
Licensed Product.
1.22 "Packaging" means, with respect to each Licensed Product, the carton,
containers, packaging, edge labels and other proprietary labels, trade dress and
wrapping materials, including any jewel case (or other CD-ROM or DVD-ROM
container) or parts thereof, but excluding Printed Materials and PlayStation 2
Format Discs.
1.23 "PlayStation 2 Format Discs" means the uniquely marked or colored CD-ROM
or DVD-ROM discs formatted for use with the System which, for purposes of this
Agreement, are manufactured on behalf of Publisher and contain Licensed Products
or SCEA Demo Discs.
1.24 "Printed Materials" means all artwork and mechanicals set forth on the
disc label of the PlayStation Disc relating to any of the Licensed Products and
on or inside any Packaging for the Licensed Product, and all instructional
manuals, liners, inserts, trade dress and other user information to be inserted
into the Packaging.
1.25 "Product Information" means any information owned or licensed by
Publisher relating in any way to Licensed Products, including but not limited to
demos, videos, hints and tips, artwork, depictions of Licensed Product cover art
and videotaped interviews.
1.26 "Product Proposal" shall have the meaning set forth in Section 5.2.1
hereto.
1.27 "Product Software" means any software including audio and video material
developed by a Licensed Publisher or Licensed Developer, which, either by itself
or combined with Product Software of other licensees, when integrated with
software provided by SCEA or an Affiliate of SCEA, creates Executable Software.
It is understood that Product Software contains no proprietary information of
Sony or any other rights of SCEA.
1.28 "Publisher Intellectual Property Rights" means those intellectual
property rights, including but not limited to patents and other patent rights,
copyrights, trademarks, service marks, trade names, trade dress, mask work
rights, utility model rights, trade secret rights, technical information,
know-how, and the equivalents of the foregoing under the laws of any
jurisdiction, and all other proprietary or intellectual property rights
throughout the universe, which pertain to Product Software, Product Information,
Printed Materials, Advertising Materials or other rights of Publisher required
or necessary under this Agreement.
2 CONFIDENTIAL
1.29 "Purchase Order" means a written purchase order processed in accordance
with the terms of Section 6.2.2 hereto, the Manufacturing Specifications or
other terms provided separately by SCEA or a Designated Manufacturing Facility
to Publisher.
1.30 "SCEA Demo Disc" means any demonstration disc developed and distributed
by SCEA.
1.31 "SCEA Established Third Party Demo Disc Programs" means (i) any consumer
or trade demonstration disc program specified in the SourceBook 2, and (ii) any
other third party demo disc program established by SCEA for Licensed Publishers.
1.32 "SCEA Intellectual Property Rights" means those intellectual property
rights, including but not limited to patents and other patent rights,
copyrights, trademarks, service marks, trade names, trade dress, mask work
rights, utility model rights, trade secret rights, technical information,
know-how, and the equivalents of the foregoing under the laws of any
jurisdiction, and all other proprietary or intellectual property rights
throughout the universe, which are required to ensure compatibility with the
System or which pertain to the Licensed Trademarks.
1.33 "SCEA Product Code" means the product identification number assigned to
each Licensed Product, which shall consist of separate product identification
numbers for multiple disc sets (i.e., SLUS-xxxxx). This SCEA Product Code is
used on the Packaging and PlayStation Disc relating to each Licensed Product, as
well as on most communications between SCEA and Publisher as a mode of
identifying the Licensed Product other than by title.
1.34 "Sony Materials" means any data, object code, source code, firmware,
documentation (or any part(s) of any of the foregoing), related to the System,
selected in the sole judgment of SCEA, which are provided or supplied by SCEA or
an Affiliate of SCEA to Publisher or any Licensed Developer and/or other
Licensed Publisher. For purposes of this Agreement, Sony Materials shall not
include any hardware portions of the Development Tools, but shall include
firmware in such hardware.
1.35 "SourceBook 2" means the PlayStation 2 SourceBook (or any other
reference guide containing information similar to the SourceBook 2 but
designated with a different name) prepared by SCEA, which is provided separately
to Publisher. The SourceBook 2 is designed to serve as the first point of
reference by Publisher in every phase of the development, approval, manufacture
and marketing of Licensed Products.
1.36 "Standard Rebate" shall mean the rebate offered by SCEA on titles of
Licensed Products that achieve specified sales volumes as set forth in Section
8.4 of this Agreement.
1.37 "Third Party Demo Disc" means any demo disc developed and marketed by a
Licensed Publisher, which complies with the terms of an SCEA Established Third
Party Demo Disc Program.
1.38 "Unit" means an individual copy of a Licensed Product title regardless
of the number of PlayStation 2 Format Discs constituting such Licensed Product
title.
1.39 "Wholesale Price" or "WSP" shall mean the greater of (i) the first
published price of the Licensed Product offered to retailers by Publisher as
evidenced by a sell sheet or price list issued by Publisher, or (ii) the actual
price paid by retailers upon the first commercial shipment of a Licensed Product
without offsets, rebates or deductions from invoices of any kind.
2. License.
2.1 License Grant. SCEA grants to Publisher, and Publisher hereby accepts,
for the term of this Agreement, within the Licensed Territory, under SCEA
Intellectual Property Rights owned, controlled or licensed by SCEA, a
non-exclusive, non-transferable license, without the right to sublicense (except
as specifically provided herein), to publish Licensed Products using Sony
Materials, which right shall be limited to the following rights and other rights
set forth in, and in accordance with the terms of, this LPA: (i) to produce or
develop Licensed Products and to enter into agreements with Licensed Developers
and other third parties to develop Licensed Products; (ii) to have such Licensed
Products manufactured; (in) to market, distribute and sell such Licensed
Products and to authorize others to do so; (iv) to use the Licensed Trademarks
strictly and only in connection with the development, manufacturing, marketing,
packaging, advertising and promotion of the Licensed Products, and subject to
SCEA's right of approval as provided herein; and (v) to sublicense to end users
the right to use the Licensed Products for noncommercial purposes in conjunction
with the System only, and not with other devices or for public performance.
2.2 Separate PlayStation Agreements. Unless specifically set forth in this
Agreement, all terms used herein are specific to the System and the third party
licensing program related thereto and not to the original PlayStation game
console or third party licensing program related thereto. Licenses relating to
the original PlayStation game console are subject to separate agreements with
SCEA, and any license of rights to Publisher under such separate agreements
shall not confer on Publisher any rights under the System and vice versa.
3. Development of Licensed Products.
3.1 Right to Develop. This LPA grants Publisher the right to develop Licensed
Products. It also gives Publisher the right to purchase and/or license
3 CONFIDENTIAL
Development Tools, as is appropriate, from SCEA or its designated agent,
pursuant to a separate Development System Agreement with SCEA, to assist in such
development. In developing Executable Software (or portions thereof), Publisher
and its agents shall fully comply in all respects with any and all technical
specifications which may from time to time be issued by SCEA. In the event that
Publisher uses third party tools to develop Executable Software, Publisher shall
be responsible for ensuring that it has obtained appropriate licenses for such
use.
3.2 Development by Third Parties. Except as otherwise set forth herein,
Publisher shall not provide Sony Materials or SCEA's Confidential Information to
any third party. Publisher shall be responsible for determining that third
parties meet the criteria net forth herein. Publisher may contract with a third
party for development of Licensed Products, provided that such third party is:
(i) a Licensed Publisher, (ii) a Licensed Developer, or (iii) an SCEA-authorized
subcontractor in compliance with the provisions of Section 16.6. Publisher shall
notify SCEA in writing of the identity of any such third party within thirty
(30) days of entering into an agreement or other arrangement with the third
party.
4. Limitations on Licenses; Reservation of Rights.
4.1 Reverse Engineering Prohibited. Other than as expressly permitted by SCEA
in writing, Publisher shall not directly or indirectly disassemble, decrypt,
electronically scan, peel semiconductor components, decompile, or otherwise
reverse engineer in any manner or attempt to reverse engineer or derive source
code from, all or any portion of the Sony Materials, or permit, assist or
encourage any third party to do no. Other than as expressly permitted by SCEA in
writing, Publisher shall not use, modify, reproduce, sublicense, distribute,
create derivative works from, or otherwise provide to third parties, the Sony
Materials, in whole or in part, other than as expressly permitted by SCEA. SCEA
shall permit Publisher to study the performance, design and operation of the
Development Tools solely for the limited purposes of developing and testing
Publisher's software applications, or to build tools to assist Publisher with
the development and testing of software applications for Licensed Products. Any
tools developed or derived by Publisher resulting from the study of the
performance, design or operation of the Development Tools shall be considered as
derivative products of the Sony Materials for copyright purposes, but may be
treated as trade secrets of Publisher. In no event shall Publisher patent any
tools created, developed or derived from Sony Materials. Publisher shall not
make available to any third party any tools developed or derived from the study
of the Development Tools without the express written permission of SCEA. Use of
such tools shall be strictly limited to the creation or testing of Licensed
Products and any other use, direct or indirect of such tools is strictly
prohibited. Publisher shall be required in all cases to pay royalties in
accordance with Section 8hereto to SCEA on any of Publisher's products utilizing
any Sony Materials or derivative works made therefrom. Moreover, Publisher shall
bear all risks arising from incompatibility of its Licensed Product and the
System resulting from use of Publisher-created tools. The burden of proof under
this Section shall be on Publisher, and SCEA reserves the right to require
Publisher to furnish evidence satisfactory to SCEA that Publisher has complied
with this Section.
4.2 Reservation of SCEA's Rights.
4.2.1 Limitation of Rights to Licenses Granted. The licenses granted in
this Agreement extend only to the publication, development, manufacture,
marketing, distribution and sale of Licensed Products for use on the System, in
such formats as may be designated by SCEA. Without limiting the generality of
the foregoing and except as otherwise provided herein, Publisher shall not
distribute or transmit the Executable Software or the Licensed Products via
electronic means or any other means now known or hereafter devised, including
without limitation, via wireless, cable, fiber optic means, telephone lines,
microwave and/or radio waves, or over a network of computers or other devices.
Notwithstanding this limitation, Publisher may electronically transmit
Executable Software from site to site, or from machine to machine over a
computer network, for the sole purpose of facilitating development; provided
that no right of retransmission shall attach to any such transmission, and
provided further that Publisher shall use reasonable security measures customary
within the high technology industry to reduce the risk of unauthorized
interception or retransmission of such transmissions. This Agreement does not
grant any right or license, under any SCEA Intellectual Property Rights or
otherwise, except as expressly provided herein, and no other right or license is
to be implied by or inferred from any provision of this Agreement or the conduct
of the parties hereunder.
4.2.2 Other Use of Sony Materials and SCEA Intellectual Property Rights.
Publisher shall not make use of any Sony Materials or any SCEA Intellectual
Property Rights (or any portion thereof) except as authorized by and in
compliance with the provisions of this Agreement. Publisher shall not use the
Executable Software, Sony Materials or SCEA's Confidential Information in
connection with the development of any software for any emulator or other
computer hardware or software system. No right, license or privilege has been
granted to Publisher hereunder concerning the development of any collateral
product or other use or purpose of any kind whatsoever which displays or depicts
any of the Licensed Trademarks. The rights set forth in Section 2.1(v) hereto
are limited to the right to sublicense such rights to end users for
non-commercial use; any public performance relating to the Licensed Product or
the System is prohibited unless expressly authorized in writing by SCEA.
4 CONFIDENTIAL
4.3 Reservation of Publisher's Rights. Separate and apart from Sony Materials
and other rights licensed to Publisher by SCEA hereunder, as between Publisher
and SCEA, Publisher retains all rights, title and interest in and to the Product
Software, and the Product Proposals and Product Information related thereto,
including without limitation Publisher Intellectual Property Rights therein, as
well as Publisher's rights in any source code and other underlying material such
as artwork and music related thereto and any names used as titles for Licensed
Products and other trademarks used by Publisher. Nothing in this Agreement shall
be construed to restrict the right of Publisher to develop, distribute or
transmit products incorporating the Product Software and such underlying
material (separate and apart from the Sony Materials) for any hardware platform
or service other than the System, or to use Printed Materials or Advertising
Materials approved by SCEA as provided herein (provided that such Printed
Materials and/or Advertising Materials do not contain any Licensed Trademarks)
as Publisher determines for such other platforms. SCEA shall not do or cause to
be done any act or thing in any may impairing or tending to impair or dilute any
of Publisher's rights, title or interests hereunder. Notwithstanding the
foregoing, Publisher shall not distribute or transmit Product Software which is
intended to be used with the System via electronic means or any other means now
known or hereafter devised, including without limitation, via wireless, cable,
fiber optic means, telephone lines, microwave and/or radio waves, or other a
network of computers or other devices, except as otherwise permitted in Section
4.2.1 hereto.
4.4 Additions to and Deletions from Licensed Territory. SCEA may, from time
to time, add one or more countries to the Licensed Territory by providing
written notice of such addition to Publisher. SCEA shall also have the right to
delete, and intends to delete any countries from the Licensed Territory if, in
SCEA's reasonable judgment, the laws or enforcement of such laws in such
countries do not protect SCEA Intellectual Property Rights. In the event a
country is deleted from the Licensed Territory, SCEA shall deliver to Publisher
a notice stating the number of days within which Publisher shall cease
distributing Licensed Products, and retrieve any Development Tools located, in
any such deleted country. Publisher shall cease distributing Licensed Products,
and retrieve any Development Tools, directly or through subcontractors, by the
end of the period stated in such notice.
4.5 SourceBook 2 Requirement. Publisher shall be required to comply with all
the provisions of the SourceBook 2, including without limitation the Technical
Requirements Checklist therein, when published, or within a commercially
reasonable time following its publication to incorporate such provisions, as if
such provisions were set forth in this Agreement.
5. Quality Standards for the Licensed Products.
5.1 Quality Assurance Generally. The Licensed Products (and all portions
thereof) and Publisher's use of any Licensed Trademarks shall be subject to
SCEA's prior written approval, which shall not be unreasonably withheld or
delayed and which shall be within SCEA's sole discretion as to acceptable
standards of quality. SCEA shall have the right at any stage of the development
of a Licensed Product to review such Licensed Product to ensure that it meets
SCEA's quality assurance standards. All Licensed Products will be developed to
substantially utilize the particular capabilities of the System's proprietary
hardware, software and graphics. No approval by SCEA of any element or stage of
development of any Licensed Product shall be deemed an approval of any other
element or stage of such Licensed Product, nor shall any such approval be deemed
to constitute a waiver of any of SCEA's rights under this Agreement. In
addition, SCEA's approval of any element or any stage of development of any
Licensed Product shall not release Publisher from any of its representations and
warranties in Section 9.2 hereunder.
5.2 Product Proposals.
5.2.1 Submission of Product Proposal. Publisher shall submit to SCEA for
SCEA's written approval or disapproval, which shall not be unreasonably withheld
or delayed, a written proposal (the "Product Proposal"). Such Product Proposal
must contain all information specified in the SourceBook 2, as well as any
additional information that SCEA may deem to be useful in evaluating the
proposed Licensed Product.
5.2.2 Approval of Product Proposal. After SCEA's review of Publisher's
Product Proposal, Publisher will receive written notice from SCEA of the status
of the Product Proposal, which may range from "Approved" to "Not Approved." Such
conditions shall have the meanings ascribed to them in the SourceBook 2, and
maybe changed from time to time by SCEA. If a Product Proposal is "Not
Approved", then neither Publisher nor any other Licensed Developer or Licensed
Publisher may re-submit such Product Proposal without significant, substantive
revisions. SCEA shall have no obligation to approve any Product Proposal
submitted by Publisher. Any development conducted by or at the direction of
Publisher and any legal commitment relating to development work shall be at
Publisher's own financial and commercial risk. Publisher shall not construe
approval of a Product Proposal as a commitment by SCEA to grant final approval
to such Licensed Product. Nothing herein shall restrict SCEA from commercially
exploiting any coincidentally similar concept(s) and/or product(s), which have
been independently developed by SCEA, an Affiliate of SCEA or any third party.
5.2.3 Changes to Product Proposal. Publisher shall notify SCEA promptly in
writing in the event of any material proposed change in any portion of the
5 CONFIDENTIAL
Product Proposal. SCEA's approval of a Product Proposal shall not obligate
Publisher to continue with development or production of the proposed Licensed
Product, provided that Publisher must immediately notify SCEA in writing if it
discontinues, cancels or otherwise delays past the original scheduled delivery
date the development of any proposed Licensed Product. In the event that
Publisher licenses a proposed Licensed Product from another Licensed Publisher
or a Licensed Developer, it shall immediately notify SCEA of such change and
must re-submit such Licensed Product to SCEA for approval in accordance with the
provisions of Section 5.2.1 above.
5.3 Work-in-Progress.
5.3.1 Submission and Review of Work-in-Progress. SCEA shall require
Publisher to submit to SCEA work-in-progress on Licensed Products at certain
intervals throughout their development and, upon written notice to Publisher, at
any time during the development process. Upon approval of the Product Proposal,
Publisher must, within the time frame indicated in the approval letter,
communicate with SCEA and mutually agree on a framework for the review of such
Licensed Product throughout the development process ("Review Process"). Once the
Review Process has begun, Publisher shall be responsible for submitting
work-in-progress to SCEA in accordance with such Review Process. Failure to
submit work-in-progress in accordance with any stage of the Review Process may,
at SCEA's discretion, result in revocation of approval of such Product Proposal.
5.3.2 Approval of Work in Progress. SCEA shall have the right to approve,
reject or require additional information with respect to each stage of the
Review Process. SCEA shall specify in writing the reasons for any such rejection
or request for additional information and shall state what corrections and/or
improvements are necessary. If any stage of the Review Process is not provided
to SCEA or is not successfully met after a reasonable cure period agreed to
between SCEA and Publisher, SCEA shall have the right to revoke the approval of
Publisher's Product Proposal.
5.3.3 Cancellation or Delay; Conditions of Approval. Licensed Products
which are canceled by Publisher or are late in meeting the final Executable
Software delivery date by more than three (3) months (without agreeing with SCEA
on a modified final delivery date) shall be subject to the termination
provisions set forth in Section 14.3 hereto. In addition, failure to make
changes required by SCEA to the Licensed Product at any stage of the Review
Process, or making material changes to the Licensed Product without SCEA's
approval, may subject Publisher to the termination provisions set forth in
Section 14.3 hereto.
5.4 Approval of Executable Software. On or before the date specified in the
Product Proposal or asdetermined by SCEA pursuant to the Review Process,
Publisher shall deliver to SCEA for its inspection and evaluation, a final
version of the Executable Software for the proposed Licensed Product. SCEA will
evaluate such Executable Software and notify Publisher in writing of its
approval or disapproval, which shall not be unreasonably withheld or delayed. If
such Executable Software is disapproved, SCEA shall specify in writing the
reasons for such disapproval and state what corrections and improvements are
necessary. After making the necessary corrections and improvements, Publisher
shall submit a new version of such Executable Software for SCEA's approval. SCEA
shall have the right to disapprove Executable Software if it fails to comply
with SCEA's corrections or improvements or one or more conditions as set forth
in the SourceBook 2 with no obligation to review all elements of any version of
Executable Software. All final versions of Executable Software shall be
submitted in the format prescribed by SCEA and shall include such number of
Master Discs as SCEA may require from time to time. Publisher hereby (i)
warrants that all final versions of Executable Software are fully tested, (ii)
shall use its best efforts to ensure such Executable Software is fully debugged
prior to submission to SCEA; and (iii) warrants that all versions of Executable
Software comply or will comply with standards set forth in the SourceBook 2 or
other documentation provided by SCEA to Publisher. In addition, prior to
manufacture of Executable Software, Publisher must sign an accountability form
stating that (x) Publisher approves the release of such Executable Software for
manufacture in its current form and (y) Publisher shall be fully responsible for
any problems related to such Executable Software.
5.5 Printed Materials.
5.5.1 Compliance with Guidelines. For each proposed Licensed Product,
Publisher shall be responsible, at Publisher's expense, for creating and
developing Printed Materials. All Printed Materials shall comply with the
Guidelines, which may be amended from time to time, provided that Publisher
shall, except as otherwise provided herein, only be required to implement
amended Guidelines in subsequent orders of Printed Materials and shall not be
required to recall or destroy previously manufactured Printed Materials, unless
such Printed Materials do not comply with the original requirements in the
Guidelines or unless explicitly required to do so in writing by SCEA.
5.5.2 Submission and Approval of Printed Materials. No later than
submission of final Executable Software for a proposed Licensed Product,
Publisher shall also deliver to SCEA, for review and evaluation, the proposed
final Printed Materials and a form of limited warranty for the proposed Licensed
Product. Failure to meet any scheduled release dates for a Licensed Product is
solely the risk and responsibility of Publisher, and SCEA assumes no
responsibility for Publisher failing to meet such scheduled release dates due to
6 CONFIDENTIAL
this submission process. The quality of such Printed Materials shall be of the
same quality as that associated with other commercially available high quality
software products. If any of the Printed Materials are disapproved, SCEA shall
specify the reasons for such disapproval and state what corrections are
necessary. SCEA shall have no liability to Publisher for costs incurred or
irrevocably cornmitted to by Publisher for production of Printed Materials that
are disapproved by SCEA. After making the necessary corrections to any
disapproved Printed Materials, Publisher must submit new Printed Materials for
approval by SCEA. SCEA shall not unreasonably withhold or delay its review of
Printed Materials.
5.6 Advertising Materials.
5.6.1 Submission and Approvalof Advertising Materials. Pre-production
samples of all Advertising Materials shall be submitted by Publisher to SCEA, at
Publisher's expense, prior to any actual production, use or distribution of any
such items by Publisher or on its behalf. SCEA shall evaluate and approve such
Advertising Materials, which approval shall not be unreasonably withheld or
delayed, as to the following standards: (i) the content, quality, and style of
the overall advertisement, (ii) the quality, style, appearance and usage of any
of the Licensed Trademarks; (iii) appropriate references of any required
notices; and (iv) compliance with the Guidelines. If any of the Advertising
Materials are disapproved, SCEA shall specify the reasons for such disapproval
and state what corrections are necessary. SCEA may require Publisher to
immediately withdraw _and reprint any Advertising Materials that have been
published but have not received the written approval of SCEA. SCEA shall have no
liability to Publisher for costs incurred or irrevocably committed to by
Publisher for production of Advertising Materials that are disapproved by SCEA.
For each Licensed Product, Publisher shall be required to deliver to SCEA an
accountability form stating that all Advertising Materials for such Licensed
Product comply or will comply with the Guidelines for use of the Licensed
Trademarks. After making the necessary corrections to any disapproved
Advertising Materials, Publisher must submit new proposed Advertising Materials
for approval by SCEA.
5.6.2 Failure to Comply; Three Strikes Program. Publishers who fail to
obtain SCEA's approval of Advertising Materials prior to broadcast or
publication shall be subject to the provisions of the "Three Strikes" program
outlined in the SourceBook 2. Failure to obtain SCEA's approval of Advertising
Materials could result in termination of this LPA or termination of approval of
the Licensed Product, or could subject Publisher to the provisions of Section
14.4 hereto. Failure to meet any scheduled release dates for Advertising
Materials is solely the risk and responsibility of Publisher, and SCEA assumes
no responsibility for Publisher failing to meet such scheduled release dates due
to approval requirements as set forth in this Section.
5.6.3 SCEA Materials. Subject in each instance to the prior written
approval of SCEA, Publisher may use advertising materials owned by SCEA
pertaining to the System or to the Licensed Trademarks on such Advertising
Materials as may, in Publisher's judgment, promote the sale of Licensed
Products.
5.7 Rating Requirements. If required by SCEA or any governmental entity,
Publisher shall submit each Licensed Product to a consumer advisory ratings
system designated by SCEA and/or such governmental entity for the purpose of
obtaining rating code(s) for each Licensed Product. Any and all costs and
expenses incurred in connection with obtaining such rating code(s) shall be
borne solely by Publisher. Any required consumer advisory rating code(s)
procured hereby shall be displayed on the Licensed Product and in the associated
Printed Materials and Advertising Materials, at Publisher's cost and expense, in
accordance with the SourceBook 2 or other documentation provided by SCEA to
Publisher.
5.8 Publisher's Additional Quality Assurance Obligations. If at any time or
times subsequent to the approval of Executable Software and Printed Materials,
SCEA identifies any material defects (such materiality to be determined by SCEA
in its sole discretion) with respect to the Licensed Product, or in the event
that SCEA identifies any improper use of its Licensed Trademarks or Sony
Materials with respect to the Licensed Product, or any such material defects or
improper use are brought to the attention of SCEA, Publisher shall, at no cost
to SCEA, promptly correct any such material defects, or improper use of Licensed
Trademarks or Sony Materials, to SCEA's commercially reasonable satisfaction,
which may include, if necessary in SCEA's judgment, the recall and re-release of
such Licensed Product. In the event any Units of Licensed Products create any
risk of loss or damage to any property or injury to any person, Publisher shall
immediately take effective steps, at Publisher's sole liability and expense, to
recall and/or to remove such defective Units from any affected channels of
distribution, provided, however, that if Publisher is not acting as the
distributor and/or seller for the Licensed Products, its obligation hereunder
shall be to use its best efforts to arrange removal of such Licensed Product
from channels of distribution. Publisher shall provide all end-user support for
the Licensed Products and SCEA expressly disclaims any obligation to provide
end-user support on Publisher's Licensed Products.
6. Manufacture of the Licensed Products.
6.1 Manufacture of Units. Upon approval of Executable Software and associated
Printed Materials pursuant to Section 5, and subject to Sections 6.1.2, 6.1.3
7 CONFIDENTIAL
and 6.1.4 below, the Designated Manufacturing Facility will, in accordance with
the terms and conditions set forth in this Section 6, and at Publisher's expense
(a) manufacture PlayStation 2 Format Discs for Publisher; (b) manufacture
Publisher's Packaging and/or Printed Materials; and/or (c) assemble the
PlayStation 2 Format Discs with the Printed Materials and the Packaging.
Publisher shall comply with all Manufacturing Specifications related to the
particular terms set forth herein. SCEA reserves the right to insert or require
the Publisher to insert certain Printed Materials relating to the System or
Licensed Trademarks into each Unit.
6.1.1 Manufacture of PlayStation 2 Format Discs.
6.1.1.1 aced facturin Facilities. To insure compatibility of the
PlayStation 2 Format Discs with the System, consistent quality of the Licensed
Product and incorporation of anti-piracy security systems, SCEA shall designate
and license a Designated Manufacturing Facility to reproduce PlayStation 2
Format Discs. Publisher shall purchase all of its requirements for PlayStation 2
Format Discs from such Designated Manufacturing Facility during the term of the
Agreement. Any Designated Manufacturing Facility shall be a third party
beneficiary of this Agreement.
6.1.1.2 Creation of Master CD-ROM or DVD-ROM. Pursuant to Section 5.4 in
connection with final testing of Executable Software, Publisher shall provide
SCEA with the number of Master Discs specified in the SourceBook 2. A Designated
Manufacturing Facility shall create from one of the fully approved Master Discs
provided by Publisher the original master CD-ROM or DVD-ROM, from which all
other copies of the Licensed Product are to be replicated. Publisher shall be
responsible for the costs, as determined by the Designated Manufacturing
Facility, of producing such original master. In order to insure against loss or
damage to the copies of the Executable Software furnished to SCEA, Publisher
will retain duplicates of all Master Discs, and neither SCEA nor any Designated
Manufacturing Facility shall be liable for loss of or damage to any Master Discs
or Executable Software.
6.1.2 Manufacture of Printed Materials.
6.1.2.1 Manufacture by Designated Manufacturing Facility. If Publisher
elects to obtain Printed Materials from a Designated Manufacturing Facility,
Publisher shall deliver all SCEA-approved Printed Materials to that Designated
Manufacturing Facility, at Publisher's sole risk and expense, and the Designated
Manufacturing Facility will manufacture such Printed Materials in accordance
with this Section 6. In order to insure against loss or damage to the copies of
the Printed Materials furnished to SCEA, Publisher will retain duplicates of all
Printed Materials, and neither SCEA norany Designated Manufacturing Facility
shall be liable for loss of or damage to any such Printed Materials.
6.1.2.2 Manufacture by Alternate Source. Subject to SCEA's approval as
provided in Section 5.5.2 hereto and in this Section, Publisher may elect to be
responsible for manufacturing its own Printed Materials (other than any Artwork
which may be placed directly upon the PlayStation Disc, which Publisher will
supply to the Designated Manufacturing Facility for placement), at Publisher's
sole risk and expense. Prior to production of each order, Publisher shall be
required to supply SCEA with samples of any Printed Materials not produced or
supplied by a Designated Manufacturing Facility, at no charge to SCEA or
Designated Manufacturing Facility, for SCEA's approval with respect to the
quality thereof. SCEA shall have the right to disapprove any Printed Materials
that do not comply with the Manufacturing Specifications. Manufacturing
Specifications for Printed Materials shall be comparable to manufacturing
specifications applied by SCEA to its own software products for the System. If
Publisher elects to supply its own Printed Materials, neither SCEA nor any
Designated Manufacturing Facility shall be responsible for any delays arising
from use of Publisher's own Printed Materials.
6.1.3 Manufacture of Packaging.
6.1.3.1 Manufacture by Designated Manufacturing Facility. To ensure
consistent quality of the Licensed Products, SCEA may designate and license a
Designated Manufacturing Facility to reproduce proprietary Packaging for the
System. If SCEA creates proprietary Packaging for the System, then Publisher
shall purchase all of its requirements for such proprietary Packaging from a
Designated Manufacturing Facility during the term of the Agreement, and the
Designated Manufacturing Facility will manufacture such Packaging in accordance
with this Section 6.
6.1.3.2 Manufacture by Alternate Source. If SCEA elects to use standard,
non-proprietary Packaging for the System, then Publisher may elect to be
responsible for manufacturing its own Packaging (other than any proprietary
labels and any portion of a container containing Licensed Trademarks, which
Publisher must purchase from a Designated Manufacturing Facility). Publisher
shall assume all responsibility for the creation of such Packaging at
Publisher's sole risk and expense. Publisher shall be responsible for encoding
and printing proprietary edge labels provided by a Designated Manufacturing
Facility with information reasonably specified by SCEA from time to time and
will apply such labels to each Unit of the Licensed Product as reasonably
specified by SCEA. Prior to production of each order, Publisher shall be
required to supply SCEA with samples of any Packaging not produced or supplied
by a Designated Manufacturing Facility, at no charge to SCEA or Designated
Manufacturing Facility, for SCEA's approval with respect to the quality thereof
8 CONFIDENTIAL
SCEA shall have the right to disapprove any Packaging that does not comply with
the Manufacturing Specifications. Manufacturing Specifications for Packaging
shall be comparable to manufacturing specifications applied by SCEA to its own
software products for the System. If Publisher procures Packaging from an
alternate source, then it most also procure assembly services from an alternate
source. If Publisher elects to supply its own Packaging, neither SCEA nor any
Designated Manufacturing Facility shall be responsible for any delays arising
from use of Publisher's own Packaging.
6.1.4 Assembly Services. Publisher may either procure assembly services
from a Designated Manufacturing Facility or from an alternate source. If
Publisher elects to be responsible for assembling the Licensed Products, then
the Designated Manufacturing Facility shall ship the component parts of the
Licensed Product to a destination provided by Publisher, at Publisher's sole
risk and expense. SCEA shall have the right to inspect any assembly facilities
utilized by Publisher in order to determine if the component parts of the
Licensed Products are being assembled in accordance with SCEA's quality
standards. SCEA may require that Publisher recall any Licensed Products that do
not contain proprietary labels or other material component parts or that
otherwise fail to comply with the Manufacturing Specifications. If Publisher
elects to use alternate assembly facilities, neither SCEA nor any Designated
Manufacturing Facility shall be responsible for any delays or missing component
parts arising from use of alternate assembly facilities.
6.2 Price, Payment and Terms.
6.2.1 Price. The applicable price for manufacture of any Units of Licensed
Products ordered hereunder shall be provided to Publisher by the Designated
Manufacturing Facility. Purchase shall be subject to the terms and conditions
set out in any purchase order form supplied to Publisher by the Designated
Manufacturing Facility.
6.2.2 Orders. Publisher shall issue to a Designated Manufacturing Facility
a written Purchase Order(s) in the form set forth and containing the information
required in the Manufacturing Specifications, with a copy to SCEA. All orders
shall be subject to approval by SCEA, which shall not be unreasonably withheld
or delayed. Purchase Orders issued by Publisher to a Designated Manufacturing
Facility for each Licensed Product approved by SCEA shall be non-cancelable and
be subject to the order requirements of the Designated Manufacturing Facility.
6.2.3 Payment Terms. Purchase Orders will be invoiced as soon as
reasonably practical after receipt, and such invoice will include both
manufacturing price and royalties payable pursuant to Section 8.1 or 8.2 hereto
foreach Unit of Licensed Products ordered. Each invoice will be payable either
on a cash-in-advance basis or pursuant to a letter of credit, or, at SCEA's sole
discretion, on credit terms. Terms for cash-in-advance and letter of credit
payments shall be as set forth in the SourceBook 2. All amounts hereunder shall
be payable in United States dollars. All associated banking charges with respect
to payments of manufacturing costs and royalties shall be borne solely by
Publisher.
6.2.3.1 Credit Terms. SCEA may at its sole discretion extend credit terms
and limits to Publisher. SCEA may also revoke such credit terms and limits at
its sole discretion. If Publisher qualifies for credit terms, then orders will
be invoiced upon shipment of Licensed Products and each invoice will be payable
within thirty (30) days of the date of the invoice. Any overdue sums shall bear
interest at the rate of one and one-half (1- 'A%) percent per month, or such
lower rate as may be the maximum rate permitted under applicable law, from the
date when payment first became due to and including the date of payment thereof
Publisher shall be additionally liable for all costs and expenses of collection,
including without limitation, reasonable fees for attorneys and court costs.
6.2.3.2 General Terms. No deduction may be made from remittances unless
an approved credit memo has been issued by a Designated Manufacturing Facility.
Neither SCEA nor a Designated Manufacturing Facility shall be responsible for
shortage or breakage with respect to any order if component parts and/or
assembly services are obtained from alternate sources. Each shipment to
Publisher shall constitute a separate sale, whether said shipment be whole or
partial fulfillment of any order. Nothing in this Agreement shall excuse or be
construed as a waiver of Publisher's obligation to timely provide any and all
payments owed to SCEA and Designated Manufacturing Facility.
6.3 Delivery of Licensed Products. Neither SCEA nor any Designated
Manufacturing Facility shall have an obligation to store completed Units of
Licensed Products. Publisher may either specify a mode of delivery or allow
Designated Manufacturing Facility to select a mode of delivery.
6.4 Ownership of Master Discs. Due to the proprietary nature of the mastering
process, neither SCEA nor a Designated Manufacturing Facility shall under any
circumstances release any original master CD-ROM, Master Discs or other
in-process materials to Publisher. All such materials shall be and remain the
sole property of SCEA or Designated Manufacturing Facility. Notwithstanding the
foregoing, Publisher Intellectual Property Rights contained in Product Software
that is contained in such in-process materials is, as between SCEA and
Publisher, the sole and exclusive property of Publisher or its licensors (other
than SCEA and/or its affiliates).
9 CONFIDENTIAL
7. Marketing and Distribution.
7.1 Marketing Generally. In accordance with the provisions of this Agreement
and at no expense to SCEA, Publisher shall, and shall direct its distributors
to, diligently market, sell and distribute the Licensed Products, and shall use
commercially reasonable efforts to stimulate demand for such Licensed Products
in the Licensed Territory and to supply any resulting demand. Publisher shall
use its reasonable best efforts to protect the Licensed Products from and
against illegal reproduction and/or copying by end users or by any other persons
or entities.
7.2 Samples. Publisher shall provide to SCEA, at no additional cost, for
SCEA's internal use, five hundred and four (504) sample copies of each Licensed
Product. Publisher shall pay any manufacturing costs to the Designated
Manufacturing Facility in accordance with Section 6.2, but shall not be
obligated to pay royalties, in connection with such sample Units. In the event
that Publisher assembles any Licensed Product using an alternate source,
Publisher shall be responsible for shipping such sample Units to SCEA at
Publisher's cost and expense. SCEA shall not directly or indirectly resell any
such sample copies of the Licensed Products without Publisher's prior written
consent. SCEA may give sample copies to its employees, provided that it uses its
reasonable efforts to ensure that such copies are not sold into the retail
market. In addition, subject to availability, Publisher shall sell to SCEA
additional quantities of Licensed Products at the Wholesale Price for such
Licensed Product. Any changes to SCEA's policy regarding sample Units shall be
set forth in the SourceBook 2.
7.3 Marketing Programs of SCEA. From time to time, SCEA may invite Publisher
to participate in promotional or advertising opportunities that may feature one
or more Licensed Products from one or more Licensed Publishers. Participation
shall be voluntary and subject to terms to be determined at the time of the
opportunity. In the event Publisher elects to participate, all materials
submitted by Publisher to SCEA shall be submitted subject to Section 10.2
hereunder and delivery of such materials to SCEA shall constitute acceptance by
Publisher of the terms of the offer. Moreover, SCEA may use the Generic Line on
all multi-product marketing materials, unless otherwise agreed in writing.
7.4 Demonstration Disc Programs. SCEA may, from time to time, provide
opportunities for Publisher to participate in SCEA Demo Disc programs. In
addition, SCEA may, from time to time, grant to Publisher the right to create
Third Party Demo Discs pursuant to SCEA Established Third Party Demo Disc
Programs. The specifications with respect to the approval, creation,
manufacture, marketing, distribution and sale of any such demo disc programs
shall be set forth in the SourceBook 2 or in other documentation to be provided
by SCEA to Publisher. Except as otherwise specifically set forth herein,in the
SourceBook 2 or in other documentation, Third Party Demo Discs shall be
considered "Licensed Products" and shall be subject in all respects to the trans
and conditions of this Agreement pertaining to Licensed Products. In addition,
the following procedures shall also apply to SCEA Demo Discs and Third Party
Demo Discs:
7.4.1 SCEA Demo Discs.
7.4.1.1 License. SCEA may, but shall not be obligated to, invite Licensed
Publishers to participate in any SCEA Demo Disc program. Participation by
Publisher in an SCEA Demo Disc program shall be optional. If Publisher elects to
participate in an SCEA Demo Disc program and provides Product Information to
SCEA in connection thereto, Publisher shall thereby grant to SCEA a royalty-free
license during the term of this Agreement in the Licensed Territory to
manufacture, use, sell, distribute, market, advertise and otherwise promote
Publisher's Product Information as part of such SCEA Demo Disc program. In
addition, Publisher shall grant SCEA the right to feature Publisher and Licensed
Product names in SCEA Demo Disc Advertising Materials and to use copies of
screen displays generated by the code, representative video samples or other
Product Information in such SCEA Demo Disc Advertising Materials. All decisions
relating to the selection of first and third party Product Information and all
other aspects of SCEA Demo Discs shall be in the sole discretion of SCEA.
7.4.1.2 Submissionand Approval of Product Information. Upon receipt of
written notice that SCEA has tentatively chosen Publisher's Product Information
for inclusion in an SCEA Demo Disc, Publisher shall deliver to SCEA such
requested Product Information by no later than the deadline set forth in such
notice. Separate notice will be sent for each SCEA Demo Disc, and Publisher must
sign each notice prior to inclusion in such SCEA Demo Disc. Publisher shall
include its own Legal Copy on the title screen or elsewhere in the Product
Information submitted to SCEA. SCEA shall only provide the Generic Line on the
SCEA Demo Disc title screen and packaging. Publisher's Product Information shall
comply with SCEA's technical specifications provided to Publisher. SCEA reserves
the right to review and test the Product Information provided and request
revisions prior to inclusion on the SCEA Demo Disc. If SCEA requests changes to
the Product Information and Publisher elects to continue to participate in such
Demo Disc, Publisher shall make such changes as soon as possible after receipt
of written notice of such requested changes from SCEA, but not later than the
deadline for receipt of Product Information. Failure to make such changes and
provide the modified Product Information to SCEA by the deadline shall result in
the Product Information being removed from the SCEA Demo Disc. Costs associated
with preparation of Product Information supplied to SCEA shall be borne solely
by Publisher. Except as otherwise provided in this Section, SCEA shall not edit
or modify Product
10 CONFIDENTIAL
Information provided to SCEA by Publisher without Publisher's consent, not to be
unreasonably withheld. SCEA shall have the right to use subcontractors to assist
in the development of any SCEA Demo Disc. With respect to Product Information
provided by Publisher in demo form, the demo delivered to SCEA shall not
constitute the complete Licensed Product and shall be, at a minimum, an amount
sufficient to demonstrate the Licensed Product's core features and value,
without providing too much information so as to give consumers a disincentive to
purchase the complete Licensed Product.
7.4.1.3 No Obligation to Publish. Acceptance of Product Information for
test and review shall not be deemed confirmation that SCEA shall include the
Product Information on an SCEA Demo Disc, net shall it constitute approval of
any other element of the Licensed Product. SCEA reserves the right to choose
from products submitted from other Licensed Publishers and first party products
to determine the products to be included in SCEA Demo Discs, and Publisher's
Licensed Products will not be guaranteed prominence or preferential treatment on
any SCEA Demo Disc. Nothing herein shall be construed as creating an obligation
of SCEA to publish Product Information submitted by Publisher in any SCEA Demo
Disc, nor shall SCEA be obligated to publish, advertise or promote any SCEA Demo
Disc.
7.4.1.4 SCEA Demo Discs Sold at Retail. Publisher is aware and
acknowledges that certain SCEA Demo Discs may be distributed and sold by SCEA in
the retail market. If Publisher elects to participate in any SCEA Demo Disc
program which is sold in the retail market, as notified by SCEA to Publisher,
Publisher acknowledges prior to participation in any such SCEA Demo Disc that it
is aware of no limitations regarding Product Information provided to SCEA
pursuant to the terms of this Agreement which would in any way restrict SCEA's
ability to distribute or sell such SCEA Demo Disc at retail, nor does Publisher
or its licensors (other than SCEA and/or its affiliates) have any anticipation
of receiving any compensation from such retail sales. In the event that SCEA
institutes a SCEA Demo Disc in which a fee and/or royalty is charged to
Publisher, SCEA and Publisher will enter into a separate agreement regarding
such SCEA Demo Disc.
7.4.2 Third Party Demo Discs.
7.4.2.1 License. Publisher may participate in any SCEA Established Third
Party Demo Disc Program. Publisher shall notify SCEA of its intention to
participate in any such program, and upon receipt of such notice, SCEA shall
grant to Publisher the right and license to use Licensed Products in Third Party
Demo Discs and to use, distribute, market, advertise and otherwise promote (and,
if permitted in accordance with the terms of any SCEA Established Third Party
Program or otherwise permitted by SCEA, to sell) such Third Party Demo Discs in
accordancewith the SourceBook 2, which may be modified from time to time at the
sole discretion of SCEA. Unless separately agreed in writing with SCEA, Third
Party Demo Discs shall not be used, distributed, promoted, bundled or sold in
conjunction with other products. In addition, SCEA hereby consents to the use of
the Licensed Trademarks in connection with Third Party Demo Discs, subject to
the approval procedures set forth in this Agreement. If any SCEA Established
Third Party Demo Disc Program is specified by SCEA to be for promotional use
only and not for resale, and such Third Party Demo Disc is subsequently
discovered to be for sale, Publisher's right to produce Third Party Demo Discs
shall thereupon be automatically revoked, and SCEA shall have the right to
terminate any related Third Party Demo Discs in accordance with the terms of
Section 14.3 or 14.4 hereto.
7.4.2.2 Submissionand Approval of Third Party Demo Discs. Publisher shall
deliver to SCEA, for SCEA's prior approval, a final version of each Third Party
Demo Disc in a format prescribed by SCEA. Such Third Party Demo Disc shall
comply with all requirements provided to Publisher by SCEA in the SourceBook 2
or otherwise. In addition, SCEA shall evaluate the Third Party Demo Disc in
accordance with the approval provisions for Executable Software and Printed
Materials set forth in Sections 5.4 and 5.5, respectively. Furthermore,
Publisher shall obtain the approval of SCEA in connection with any Advertising
Materials relating to the Third Party Demo Discs in accordance with the approval
provisions set forth in Section 5.6. Costs associated with Third Party Demo
Discs shall be borne solely by Publisher. No approval by SCEA of any element of
any Third Party Demo Disc shall be deemed an approval of any other element
thereto, nor does any such approval constitute final approval for the related
Licensed Product. Unless otherwise permitted by SCEA, Publisher shall clearly
and conspicuously state on all Third Party Demo Disc Packaging and Printed
Materials that the Third Party Demo Disc is for promotional purposes only and
not for resale.
7.4.2.3 Manufacture and Royalty of Third Party Demo Discs. Publisher
shall comply with all Manufacturing Specifications with respect to the
manufacture and payment for manufacturing costs of Third Party Demo Discs, and
Publisher shall also comply with all terms and conditions of Section 6 hereto.
No costs incurred in the development, manufacture, licensing, production,
marketing and/or distribution (and if permitted by SCEA, sale) of the Third
Party Demo Disc shall be deducted from any amounts payable to SCEA hereunder.
Royalties on Third Party Demo Discs shall be as provided in Section 8.2.
7.5 Contests and Sweepstakes of Publisher. SCEA acknowledges that, from time
to time, Publisher may conduct contests and sweepstakes to promote Licensed
Products. SCEA shall permit Publisher to include contest or sweepstakes
11 CONFIDENTIAL
materials in Printed Materials and Advertising Materials, subject to compliance
with the approval provisions of Section 5.5 and 5.6 hereunder, compliance with
the provisions of Section 9.2 and 10.2 hereunder, and subject to the following
additional terms and conditions:
(i) Publisher represents that it has retained the services of a fulfillment
house to administer the contest or sweepstakes and if it has not retained the
services of a fulfillment house, Publisher represents and wan-ants that it has
the expertise to conduct such contests or sweepstakes, and in any event,
Publisher shall assume full responsibility for all aspects of such contest or
sweepstakes;
(ii) Publisher warrants that each contest, sweepstakes, and promotion, comply
with local, state and federal laws or regulations;
(iii) Publisher represents and warrants that it has obtained the consent of all
holders of intellectual property rights required to be obtained in connection
with each contest or sweepstakes including, but not limited to, the consent of
any holder of copyrights or trademarks relating to any Advertising Materials
publicizing the contest or sweepstakes, or the prizes being awarded to winners
of the contest or sweepstakes; and
(iv) Publisher shall make available to SCEA all contest and sweepstakes
material prior to publication in accordance with the approval process set forth
in Section 5.5 or 5.6.
Approval by SCEA of contest or sweepstakes materials for use in the Printed
Materials or Advertising Materials (or any use of the System or Licensed
Products as prizes in such contest or sweepstakes) shall not constitute an
endorsement by SCEA of such contest or sweepstakes, nor shall such acceptance be
construed as SCEA having reviewed and approved such materials for compliance
with any federal or state law, statute, regulations, order or the like, which
shall be Publisher's sole responsibility.
7.6 PlayStation Website. All Licensed Publishers shall be required to provide
Product Information for a web page for each of its Licensed Products for display
on the PlayStation promotional website, or other website or websites as may be
operated by SCEA from time to time in connection with the promotion of the
PlayStation brand. Specifications for Product Information for such web pages
shall be as provided in the SourceBook 2. Publisher shall provide SCEA with such
Product Information for each Licensed Product upon submission of Printed
Materials to SCEA for approval in accordance with Section 5.5.2 hereto.
Publisher shall also provide updates to such web page in a timely manner as
required by SCEA in updates to the SourceBook 2.
7.7 Distribution.
7.7.1 Distribution Channels. Publisher may use such distribution channels
as Publisher deems appropriate, including the use of third party distributors,
resellers, dealers and sales representatives. In the event that Publisher elects
to have one of its Licensed Products distributed and sold by another Licensed
Publisher, Publisher must provide SCEA with advance written notice of such
election, the name of the Licensed Publisher and any additional information
requested by SCEA regarding the nature of the distribution services provided by
such Licensed Publisher prior to manufacture of such Licensed Product.
7.7.2 Limitations on Distribution. Notwithstanding any other provisions in
this Agreement, Publisher shall not, directly or indirectly, solicit orders from
or sell any Units of the Licensed Products to any person or entity outside of
the Licensed Territory. In addition, Publisher shall not directly or indirectly
solicit orders for or sell any Units of the Licensed Products in any situation
where Publisher knows or reasonably should know that such Licensed Products may
be exported or resold outside of the Licensed Territory.
8. Royalties.
8.1 Applicable Royalties on Licensed Products.
8.1.1 Initial Orders. Publisher shall pay SCEA, either directly or through
its designee, a per title royalty in United States dollars for each Unit of the
Licensed Products manufactured based on the initial Wholesale Price of the
Licensed Product, as follows:
Wholesale Price Per Title Royalty
Band 1 If to $10.00 $1.00
Band 2 $10.01 to $16.00 $3.00
Band 3 $16.01 to $24.00 $5.00
Band 4 $24.01 to $42.00 $7.00
Band 5 $42.01 + 10% of WSP + $ 2,80
In the absence of satisfactory evidence to support the WSP, the royalty rate
that shall apply will be seven dollars ($7.00) per Unit.
8.1.2 Reorders and Other Programs. Royalties on additional orders to
manufacture a specific Licensed Product shall be the royalty determined by the
initial Wholesale Price as reported by Publisher for that Licensed Product
regardless of the wholesale price of the Licensed Product at the time of
reorder, except in the event that the Wholesale Price increases for such
Licensed Product, in which case the royalty shall be adjusted upwards to reflect
12 CONFIDENTIAL
the higher Wholesale Price. Licensed Products qualifying for SCEA's "Greatest
Hits" programs or other programs offered by SCEA shall be subject to the
royalties applicable for such programs. Publisher acknowledges that as of the
date of execution of this Agreement no "Greatest Hits" program exists for the
PlayStation 2 Third Party licensing program.
8.2 Third Party Demo Disc Program Royalties: Publisher shall pay SCEA a per
Unit royalty in United States dollars of one dollar ($1.00) for each Third Party
Demo Disc Unit manufactured. The quantity of Units ordered shall comply with the
terms of such SCEA Established Third Party Demo Disc Program.
83 Payment. Payment of royalties under Sections 8.1 and 8.2 shall be made to
SCEA through its Designated Manufacturing Facility concurrent with the placement
of an order to manufacture Licensed Product and payment of manufacturing costs
in accordance with the terms and conditions set forth in Sections 6.2.3, unless
otherwise agreed in writing with SCEA. At the time of placing an order to
manufacture a Licensed Product, Publisher shall submit to SCEA an accurate
accounting statement setting out the number of units of Licensed Product to be
manufactured, projected initial wholesale price, applicable royalty, and total
amount due SCEA. In addition, Publisher shall submit to SCEA prior to placing
the initial order for each Licensed Product a separate certification, in the
form provided by SCEA in the SourceBook 2, signed by officers of Publisher that
certifies that the Wholesale Price provided to SCEA is accurate and attaching
such documentation supporting the WSP as requested by SCEA. Payment shall be
made prior to manufacture unless SCEA has agreed to extend credit terms to
Publisher in writing pursuant to Section 6.2.3.3. Nothing herein shall be
construed as requiring SCEA to extend credit terms to Publisher. The accounting
statement due hereunder shall be subject to the audit and accounting provisions
set forth in paragraph 16.2 below. No costs incurred in the development,
manufacture, marketing, sale and/or distribution of the Licensed Products shall
be deducted from any royalties payable to SCEA hereunder. Similarly, there shall
be no deduction from the royalties otherwise owed to SCEA hereunder as a result
of any uncollectible accounts owed to Publisher, or for any credits, discounts,
allowances or returns which Publisher may credit or otherwise grant to any third
party customer of any Units of the Licensed Products, or for any taxes, fees,
assessments or expenses of any kind which may be incurred by Publisher in
connection with its sale or distribution of any Units of the Licensed Products
or arising with respect to the payment of royalties hereunder. In addition to
the royalty payments provided to SCEA hereunder, Publisher shall be solely
responsible for and bear any cost relating to any withholding taxes or other
such assessments which may be imposed by any governmental authority with respect
to the royalties paid to SCEA hereunder; provided, however, that SCEA shall not
manufacture Licensed Products outside of the United States without the
priorconsent of Publisher. Publisher shall provide SCEA with official tax
receipts or other such documentary evidence issued by the applicable tax
authorities sufficient to substantiate that any such taxes or assessments have
in fact been paid.
8.4 Rebate Programs. Publisher shall be eligible to participate in one of
three rebate programs offered by SCEA: the Standard Rebate program, the Level 1
Rebate program, or the Level 2 Rebate program. If Publisher qualifies for such
rebates as set forth herein, rebates shall be credited to Publisher's account as
provided below:
Units Ordered Standard Xxxxx 0 Xxxxx 0
0 - 500k 0% 0% 0%
500 - 1MM 2.5% 5% 7.5%
1 - 1.5MM 5% 7.5% 10%
1.5 - 2MM 7.5% 10% 15%
2 - 2.5MM 10% 15% 20%
2.5 - 3MM 15% 20% 20%
3MM + 20% 20% 20%
8.4.1 Standard Rebate Program. All Publishers qualify for the Standard
Rebate program. Rebates will be offered on an individual title basis. Rebates
will be given to any individual Licensed Product that exceeds the above numbers
of Units during the first year after first commercial shipment of such Licensed
Product. The rebate in effect at the end of such year for the Licensed Product
will remain in effect for as long as Publisher continues to sell such Licensed
Product, but Publisher will not receive further rebates if sales of such
Licensed Product hit additional thresholds as specified above after such year.
The Standard Rebate may not be used in conjunction with a Third Party Demo Disc
program or any promotional program of SCEA, with Licensed Products that qualify
for any "Greatest Hits" program of SCEA or with Licensed Products that qualify
for the Band 1 Royalty.
8.4.2 Level 1 Rebate Program: To be eligible for the Level 1 Rebate
program, Publisher must ship over five million (5,000,000) Units of certain
Licensed Products in a single Fiscal Year. Level 1 Rebates shall be credited to
Publisher on an individual title basis. Other tenms of the Level 1 Rebate are as
follows:
(i) Only Publisher's titles (as determined below) that meet the following
conditions shall count toward the five million (5,000,000) Unit threshold:
Publisher must order at least three hundred thousand (300,000) Units of the
13 CONFIDENTIAL
Licensed Product both within the first year of commercial release of such
Licensed Product and during the qualifying Fiscal Year.
(ii) Any Licensed Products, including "Greatest Hits" titles and products for
the original PlayStation game console, but excluding all demo discs, shall count
toward the five million (5,000,000) Unit threshold (provided they meet the
conditions set forth in Section 8.4.2(i) above). For purposes of determining
Level 1 Rebate thresholds and the conditions set forth in Section 8.4.2(i), full
priced Licensed Products and "Greatest Hits" Licensed Products shall be
considered separate Licensed Products, with separate Unit minimums and release
dates.
(iii) Level 1 Rebates shall apply only to Licensed Products (not including
"Greatest Hits" titles, Licensed Products qualifying for the Band 1 royalty and
products for the original PlayStation game console) ordered in the Fiscal Year
following the Fiscal Year in which the five million (5,000,000) Unit threshold
is met. Units of Licensed Products that qualified Publisher for inclusion in the
Level 1 Rebate program in the previous Fiscal Year shall not be entitled to
receive the Level 1 Rebate.
(iv) Publisher must re-qualify for the Level 1 Rebate Program each Fiscal Year.
If a Publisher fails to requalify for any Fiscal Year, then the Standard Rebate
shall apply in such Fiscal Year. The first Fiscal Year for which a Publisher may
qualify for the Level 1 Rebate shall be the Fiscal Year ending March 31, 2000,
and if the Publisher qualifies for the Level 1 Rebate, it will apply to Licensed
Products ordered in the Fiscal Year commencing April 1, 2000.
(v) Licensed Products eligible for the Level I Rebate program shall not be
eligible for Standard Rebates, and Level 1 Rebates shall supersede Standard
Rebates with respect to any individual Licensed Product. If a Licensed Product
qualifies for the Standard Rebate in one Fiscal Year, and Publisher qualifies
for the Level 1 Rebate in the next Fiscal Year, Units of such Licensed Product
ordered in the next Fiscal Year will receive the Level 1 Rebate commencing on
April 1 of the next Fiscal Year going forward, but such Level 1 Rebate will not
be credited retroactively to Units of the Licensed Product ordered in the
previous Fiscal Year. For example, Publisher orders 700,000 Units of Product X
in Fiscal Year 2001, receiving a Standard Rebate of 2.5%. Publisher qualifies
for the Level 1 Rebate in Fiscal Year 2002. Publisher will receive the Level 1
Rebate of 5% commencing with Units ordered on April 1, 2001, but will not
receive a retroactive credit for Units ordered prior to April 1, 2001. When
Publisher reaches the 1,000,000 Unit threshold, it will receive a retroactive
credit of 2.5% on all Level I Rebate Units ordered, as well as a retroactive
credit of 2.5% on Standard Rebate Units ordered in the previous Fiscal Year, and
Publisher will receive the Level 1 Rebate of 7.5% going forward.
8.4.3 Level 2 Rebate Program: To be eligible for the Level 2 Rebate
program, Publisher must ship over ten million (10,000,000) Units of certain
Licensed Products in any Fiscal Year. Level 2 Rebates shall be credited to
Publisher on an individual title basis. Other terms of the Level 2 Rebate are as
follows:
(i) Only Publisher's titles (as determined below) that meet the following
conditions shall count toward the ten million (10,000,000) Unit threshold:
Publisher must order at least three hundred thousand (300,000) Units of the
Licensed Product both within the first year of commercial release of such
Licensed Product and during the qualifying Fiscal Year.
(ii) Any Licensed Products, including "Greatest Hits" titles and products for
the original PlayStation game console, but excluding all demo discs, shall count
toward the ten million (10,000,000) Unit threshold (provided they meet the
conditions set forth in Section 8.4.3(i) above). For purposes of determining
Level 2 Rebate thresholds and the conditions set forth in Section 8.4.2(i), full
priced Licensed Products and "Greatest Hits" Licensed Products shall be
considered separate Licensed Products, with separate Unit minimums and release
dates.
(iii) Level 2 Rebates shall apply only to Licensed Products (not including
"Greatest Hits" titles, Licensed Products qualifying for the Band 1 royalty and
products for the original PlayStation game console) ordered in the Fiscal Year
following the Fiscal Year in which the ten million (10,000,000) Unit threshold
is met. Units of Licensed Products that qualified Publisher for inclusion in the
Level 2 Rebate program in the previous Fiscal Year shall not be entitled to
receive the Level 2 Rebate.
(iv) Publisher must re-qualify for the Level 2 Rebate Program each Fiscal Year.
If Publisher fails to requalify for any Fiscal Year then the Standard Rebate or
Level 1 Rebate, as the case may be, shall apply in such Fiscal Year. The first
Fiscal Year for which a Publisher may qualify for the Level 2 Rebate shall be
the Fiscal Year ending March 31, 2000, and if the Publisher qualifies for the
Level 2 Rebate, it will apply to Licensed Products ordered in the Fiscal Year
commencing April 1, 2000.
(v) Licensed Products eligible for the Level 2 Rebate program shall not be
eligible for Standard Rebates or Xxxxx 0 Xxxxxxx, xxx Xxxxx 0 Xxxxxxx shall
supersede Standard Rebates and Level 1 Rebates with respect to any individual
Licensed Product. If a Licensed Product qualifies for the Standard Rebate or
Level 1 Rebate in one Fiscal Year, and Publisher qualifies for the Level 2
Rebate in the next Fiscal Year, Units of such Licensed Product ordered in the
next Fiscal Year will receive the Level 2 Rebate going forward, but such Level 2
Rebate will not be credited retroactively to Units of the Licensed Product
ordered in the previous Fiscal Year. See Section 8.4.2(v) for an example.
14 CONFIDENTIAL
8.5 Calculation and Use of Rebates. Rebate percentages for all rebate
programs shall be credited against royalties owed SCEA and shall have no other
monetary value. All rebates, whether under the Standard Rebate, Level 1 Rebate
or Level 2 Rebate Programs shall be issued by SCEA as a credit to Publisher for
use against future royalty payments. It is Publisher's responsibility to inform
SCEA when it reaches any rebate threshold. In no event shall Publisher take a
deduction off royalties owed SCEA or deduction off an invoice payable to SCEA on
current production unless and until SCEA issues a credit to Publisher in writing
or unless otherwise agreed in writing. From time to time SCEA may allow
Publisher to use credits in other manners on terms and conditions to be
determined by SCEA. Publisher may use rebate credits to procure Development
Tools. Units of Licensed Products shall be considered "ordered" when Units first
begin to ship from a Designated Manufacturing Facility.
8.6 Rebate Credits. Subject to Sections 8.4.2(v) and 8.4.3(v), all rebate
programs are retroactive, such that Publisher receives a credit for each rebate
percentage against previous Units when it reaches the Unit threshold for the
next rebate percentage. SCEA shall credit Publisher's account with respect to
retroactive rebates as follows: (A) if Publisher's initial order for a Licensed
Product is less than any rebate threshold provided above, then SCEA shall
retroactively credit Publisher's account sixty (60) days following the date that
Publisher notifies SCEA that orders of a Licensed Product exceed any rebate
threshold, subject to SCEA's right to confirm such information; and (B) if
Publisher's initial order for a Licensed Product reaches or exceeds any rebate
threshold provided above, then Publisher may credit the rebate amount set forth
above as a separate line item on the Purchase Order with respect to such
Licensed Product, subject to SCEA's confirmation right.
9. Representations and Warranties.
9.1 Representations and Warranties of SCEA. SCEA represents and warrants
solely for the benefit of Publisher that SCEA has the right, power and authority
to enter into this Agreement and to fully perform its obligations hereunder.
9.2 Representations and Warranties of Publisher. Publisher represents and
warrants that:
(i) There is no threatened or pending action, suit, claim or proceeding
alleging that the use by Publisher of all or any part of the Product Software,
Product Proposals, Product Information, Printed Materials, Advertising Materials
or any underlying work or content embodied therein, or any name, designation or
trademark used in conjunction with the Licensed Products infringes or otherwise
violates any Intellectual Property Right or otherright or interest of any kind
whatsoever of any third party, or otherwise contesting any right, title or
interest of Publisher in or to the Product Software, Product Proposals, Product
Information, Printed Materials, Advertising Materials or any underlying work or
content embodied therein, or any name, designation or trademark used in
conjunction with the Licensed Products;
(ii) The Product Software, Product Proposals, Product Information, Printed
Materials and Advertising Materials and their contemplated use under this
Agreement do not and shall not infringe any person's or entity's rights
including without limitation, patents, copyrights (including rights in a joint
work), trademarks, trade dress, trade secret, rights of publicity, privacy,
performance, moral rights, literary rights and any other third party right;
(iii) Publisher has the right, power and authority to enter into this
Agreement, to grant SCEA the rights granted hereunder and to fully perform its
obligations hereunder;
(iv) The making of this Agreement by Publisher does not violate any separate
agreement, rights or obligations existing between Publisher and any other person
or entity, and, throughout the term of this Agreement, Publisher shall not make
any separate agreement with any person or entity that is inconsistent with any
of the provisions of this Agreement;
(v) Publisher has not sold, assigned, leased, licensed or in any other way
disposed of or encumbered the rights granted to Publisher hereunder, and
Publisher will not sell, assign, lease, license or in any other way dispose of
or encumber any of such rights except as expressly permitted hereunder or as
consented to by SCEA in writing;
(vi) Publisher has obtained the consent of all holders of intellectual property
rights required to be obtained in connection with use of any Product Information
by SCEA as licensed hereunder, and Product Information when provided to SCEA in
accordance with the terms of this Agreement may be published, marketed,
distributed and sold by SCEA in accordance with the terms and conditions of this
Agreement and without SCEA incurring any royalty, residual, union, guild or
other fees;
(vii) Publisher shall not make any representation or give any warranty to any
person or entity expressly or implicitly on SCEA's behalf, or to the effect that
the Licensed Products are connected in any way with SCEA (other than that the
Executable Software and/or Licensed Products have been developed, marketed, sold
and/or distributed under license from SCEA);
(viii) In the event that Executable Software is delivered to other Licensed
Publishers or Licensed Developers by Publisher in source code form, Publisher
15 CONFIDENTIAL
will take all precautions consistent with the protection of valuable trade
secrets by companies in high technology industries to ensure the confidentiality
of such source code,
(ix) The Executable Software and any Product Information delivered to SCEA
shall be in a commercially acceptable form, free of significant bugs, defects,
time bombs or viruses which could disrupt, delay, destroy the Executable
Software or System or render either of them less than fully useful, and shall be
fully compatible with the System and any peripherals listed on the Printed
Materials as compatible with the Licensed Product;
(x) Each of the Licensed Products, Executable Software, Printed Materials and
Advertising Materials shall be developed, marketed, sold and distributed by or
at the direction of Publisher in an ethical manner and in full compliance with
all applicable federal, state, provincial, local and foreign laws and any
regulations and standards promulgated thereunder (including but not limited to
federal and state lottery laws as currently interpreted and enforced) and will
not contain any obscene or defamatory matter;
(xi) Publisher's policies and practices with respect to the development,
marketing, sale, and/or distribution of the Licensed Products shall in no manner
reflect adversely upon the name, reputation or goodwill of SCEA;
(xii) Publisher has, or will contract with a Licensed Developer for, the
technical expertise and resources necessary to fulfill its obligations under
this Agreement; and
(xiii) Publisher shall make no false, misleading or inconsistent
representations or claims with respect to any Licensed Products, the System or
SCEA.
10. Indemnities; Limited Liability.
10.1 Indemnification by SCEA. SCEA shall indemnify and hold Publisher
harmless from and against any and all third party claims, losses, liabilities,
damages, expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim which result from or are in
connection with a breach of any of the representations or warranties provided by
SCEA herein; provided, however, that Publisher shall give prompt written notice
to SCEA of the assertion of any such claim, and provided, further, that SCEA
shall have the right to select counsel and control the defense and settlement
thereof SCEA shall have the exclusive right, at its discretion, to commence and
prosecute at its own expense any lawsuit or to take such other action with
respect to such matters as shall be deemed appropriate by SCEA. Publisher shall
provide SCEA, at no expense to Publisher, reasonable assistance and cooperation
concerning any such matter; and Publisher shall not agree to the settlement of
any suchclaim, action or proceeding without SCEA's prior writte consent.
10.2 Indemnification By Publisher. Publisher shall indemnify and hold SCEA
harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim, which result from or are in
connection with
(i) a breach of any of the provisions of this Agreement; or
(ii) infringement of a third party's intellectual property rights by Publisher;
or (iii) any claims of or in connection with any personal or bodily injury
(including death) or property damage, by whomever such claim is made, arising
out of, in whole or in part, the development, marketing, sale, distribution
and/or use of any of the Licensed Products (or portions thereof) unless due
directly to the breach of SCEA in performing any of the specific duties and/or
providing any of the specific services required of it hereunder; or (iv) any
federal, state or foreign civil or criminal actions relating to the development,
marketing, sale and/or distribution of Licensed Products. SCEA shall give prompt
written notice to Publisher of the assertion of any such indemnified claim, and,
with respect to third party claims, actions or proceedings against SCEA, SCEA
shall have the right to select counsel for SCEA and reasonably control the
defense and/or settlement thereof. Subject to the above, Publisher shall have
the right, at its discretion, to select its own counsel, to commence and
prosecute at its own expense any lawsuit, to reasonably control the defense
and/or settlement thereof or to take such other action with respect to claims,
actions or proceedings by or against Publisher. SCEA shall retain the right to
approve any settlement. SCEA shall provide Publisher, at no expense to SCEA,
reasonable assistance and cooperation concerning any such matter; and SCEA shall
not agree to the settlement of any such claim, action or proceeding (other than
third party claims, actions or proceedings against SCEA) without Publisher's
prior written consent.
10.3 LIMITATION OF LIABILITY.
10.3.1 LIMITATION OF SCEA'S LIABILITY. IN NO EVENT SHALL SCEA OR OTHER
SONY AFFILIATES AND THEIR SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE
LIABLE FOR LOSS OF PROFITS, OR ANY SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION THE BREACH OF THIS AGREEMENT BY SCEA,
THE MANUFACTURE OF THE LICENSED PRODUCTS AND THE USE OF THE LICENSED PRODUCTS,
EXECUTABLE SOFTWARE AND/OR THE SYSTEM BY PUBLISHER OR ANY END-USER, WHETHER
16 CONFIDENTIAL
UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT
LIABILITY OR OTHERWISE. IN NO EVENT SHALL SCEA'S LIABILITY ARISING UNDER,
RELATING TO OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY FOR DIRECT OR INDIRECT DAMAGES, AND INCLUDING WITHOUT LIMITATION
ANY LIABILITY UNDER SECTION 10.1 HERETO, EXCEED THE TOTAL AMOUNT PAID BY
PUBLISHER TO SCEA UNDER THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
NEITHER SCEA NOR ANY SONY AFFILIATE, NOR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES OR AGENTS, SHALL BEAR ANY RISK, OR HAVE ANY RESPONSIBILITY
OR LIABILITY, OF ANY KIND TO PUBLISHER OR TO ANY THIRD PARTIES WITH RESPECT TO
THE QUALITY, OPERATION AND/OR PERFORMANCE OF ANY PORTION OF THE SONY MATERIALS,
THE SYSTEM OR ANY LICENSED PRODUCT.
10.3.2 LIMITATION OF PUBLISHER'S LIABILITY. IN NO EVENT SHALL PUBLISHER OR
ITS AFFILIATED COMPANIES AND THEIR SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR
AGENTS BE LIABLE TO SCEA FOR ANY LOSS OF PROFITS, OR ANY SPECIAL, PUNITIVE,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF, RELATED TO OR IN
CONNECTION WITH (i) THIS AGREEMENT OR (ii) THE USE OR DISTRIBUTION IN ACCORDANCE
WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT OF ANY CODE PROVIDED BY SCEA, IN
WHOLE OR IN PART, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),
INDEMNITY, PRODUCT LIABILITY OR OTHERWISE, PROVIDED THAT SUCH LIMITATIONS SHALL
NOT APPLY TO DAMAGES RESULTING FROM PUBLISHER'S BREACH OF SECTIONS 4, 10.2, 11
OR 13 OF THIS AGREEMENT, AND PROVIDED FURTHER THAT SUCH LIMITATIONS SHALL NOT
APPLY TO AMOUNTS WHICH PUBLISHER MAY BE REQUIRED TO PAY TO THIRD PARTIES UNDER
SECTIONS 10.2 OR 16.10.
10.4 DISCLAIMER OF WARRANTY. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN,
NEITHER SCEA NOR ITS AFFILIATES AND SUPPLIERS MAKE, NOR DOES PUBLISHER RECEIVE,
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, REGARDING THE
SONY MATERIALS, SCEA'S CONFIDENTIAL INFORMATION THE SYSTEM, THE UNITS OF THE
LICENSED PRODUCTS MANUFACTURED HEREUNDER AND/OR PUBLISHER'S PRODUCT INFORMATION
INCLUDED ON SCEA DEMO DISCS. SCEA SHALL NOT BE LIABLE FOR ANY INJURY, LOSS OR
DAMAGE, DIRECT, INDIRECT OR CONSEQUENTIAL, ARISING OUT OF THE USE OR INABILITY
TO USE ANY UNITS AND/OR ANY SOFTWARE ERRORS AND/OR "BUGS" IN PUBLISHER'S PRODUCT
INFORMATION WHICH MAY BE REPRODUCED ON SCEA DEMO DISCS. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, SCEA AND ITS AFFILIATES AND SUPPLIERS EXPRESSLY
DISCLAIM THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE AND THEIR EQUIVALENTS UNDER THE LAWS OF ANY JURISDICTION, REGARDING THE
SONY MATERIALS, SCEA'S CONFIDENTIAL INFORMATION, LICENSED PRODUCTS, SCEA DEMO
DISCS AND THE SYSTEM. ANY WARRANTY AGAINST INFRINGEMENT THAT MAY BE PROVIDED IN
SECTION 2-312(3) OF THE UNIFORM COMMERCIAL CODE AND/OR IN ANY OTHER COMPARABLE
STATUTE IS EXPRESSLY DISCLAIMED.
11. SCEA Intellectual Property Rights.
11.1 Licensed Trademarks. The Licensed Trademarks and the goodwill associated
therewith are and shall be the exclusive property of SCEA or Affiliates of SCEA.
Nothing herein shall give Publisher any right, title or interest in or to any of
the Licensed Trademarks or any other trademarks of SCEA, other than the
non-exclusive license provided herein. Publisher shall not do or cause to be
done any not or thing in any way impairing or tending to impair or dilute any of
SCEA's rights, title or interests in or to any of the Licensed Trademarks or any
other trademarks of SCEA, nor shall Publisher register any trademark in its own
name or in the some of any other person or entity, or obtain rights to employ
Internet domain names or addresses, which are similar to or are likely to be
confused with any of the Licensed Trademarks or any other trademarks of SCEA.
11.2 License of Sony Materials and System. All rights with respect to the
Sony Materials and System, including, without limitation, all of SCEA
Intellectual Property Rights therein, are and shall be the exclusive property of
SCEA or Affiliates of SCEA. Nothing herein shall give Publisher any right, title
or interest in or to the Sony Materials or the System (or any portion thereof),
other than the non-exclusive license provided herein. Publisher shall not do or
cause to be done any act or thing in any way impairing or tending to impair any
of SCEA's rights, title or interests in or to the Sony Materials or the System
(or any portion thereof).
17 CONFIDENTIAL
12. Infringement of SCEA Intellectual Property Rights By Third Parties.
In the event that Publisher discovers or otherwise becomes aware that any of the
SCEA Intellectual Property Rights have been or are being infringed upon by any
third party, then Publisher shall promptly notify SCEA. SCEA shall have the sole
right, in its discretion, to institute and prosecute lawsuits against third
parties for such infringement of SCEA Intellectual Property Rights. Any lawsuit
shall be prosecuted solely at the cost and expense of SCEA and all sums
recovered in any such lawsuits, whether by judgment, settlement or otherwise
shall belong solely to SCEA. Upon request of SCEA, Publisher shall execute all
papers, testify on all matters and otherwise cooperate in every way necessary
and desirable for the prosecution of any such lawsuit. SCEA shall reimburse
Publisher for the reasonable expenses incurred as a result of such cooperation,
but unless authorized by other provisions of this Agreement, not costs and
expenses attributable to the conduct of a cross-claim or third party action.
13. Confidentiality.
13.1 SCEA's Confidential Information.
13.1.1 Definition of SCEA's Confidential Information. "SCEA's Confidential
Information" shall mean:
(i) the System, Sony Materials and Development Tools;
(ii) other documents and materials developed, owned, licensed or under the
control of Sony, including all processes, data, hardware, software, inventions,
trade secrets, ideas, creations, improvements, designs, discoveries,
developments, research and know-how, including without limitation the SourceBook
2 and SCEA Intellectual Property Rights relating to the System, Sony Materials
or Development Tools; and
(iii) information and documents regarding SCEA's finances, business, marketing
and technical plans, business methods and production plans.
SCEA's Confidential Information may consist of information in any medium,
whether oral, printed, in machine-readable form or otherwise, including
information apprised to Publisher and reduced to tangible or written form at any
time during the term of this Agreement. In addition, the existence of a
relationship between Publisher and SCEA for the purposes set forth herein shall
be deemed to be SCEA's Confidential Information unless otherwise agreed to in
writing by the parties or until publicly announced by SCEA.
13.1.2 Term of Protection of SCEA's Confidential Information. The term
for the protection of SCEA's Confidential Information shall commence on the
Effective Date first above written and shall continue in full force and effect
as long as any of SCEA's Confidential Information continues to be maintained as
confidential and proprietary by SCEA and/or Sony. During such term, Publisher
shall, pursuant to Section 13.1.3 below, safeguard and hold in trust and
confidence and not disclose or use (except for the purposes herein specified)
any and all of SCEA's Confidential Information.
13.1.3 Preservation of SCEA's Confidential Information. Publisher shall,
with respect to SCEA's Confidential Information:
(i) not disclose SCEA's Confidential Information to any person or entity, other
than those employees or directors of the Publisher whose duties justify a
"need-toknow" and who have executed a confidentiality agreement in which such
employees or directors have agreed not to disclose and to hold confidential all
confidential information and materials (inclusive of those of third parties)
which may be disclosed to them or to which they may have access during the
course of their duties. At SCEA's request, Publisher shall provide SCEA with a
copy of such confidentiality agreement between Publisher and its employees or
directors, and shall also provide SCEA with a list of employee and director
signatories. Publisher shall not disclose any of SCEA's Confidential Information
to third parties, including without limitation to consultants or agents. Any
employees or directors who obtain access to SCEA's Confidential Information
shall be advised by Publisher of the confidential nature of SCEA's Confidential
Information, and Publisher shall be responsible for any breach of this Agreement
by its employees or directors.
(ii) take all measures necessary to safeguard SCEA's Confidential Information
in order to avoid disclosure, publication, or dissemination, using as high a
degree of care and scrutiny, but at least reasonable care, as is consistent with
the protection of valuable trade secrets by companies in high technology
industries.
(iii) ensure that all written materials relating to or containing SCEA's
Confidential Information be maintained in a restricted access area and plainly
marked to indicate the secret and confidential nature thereof.
(iv) at SCEA's request, return promptly to SCEA any and all portions of SCEA's
Confidential Information, together with all copies thereof.
(v) not use, modify, reproduce, sublicense, copy, distribute, create derivative
works from, or otherwise provide to third parties, SCEA's Confidential
Information, or any portion thereof, except as provided herein, nor shall
Publisher remove any proprietary legend set forth on or contained within any of
SCEA's Confidential Information.
18 CONFIDENTIAL
13.1.4 Exceptions. The foregoing restrictions shall not apply to any
portion of SCEA's Confidential Information which:
(i) was previously known to Publisher without restriction on disclosure or use,
as proven by written documentation of Publisher; or
(ii) is or legitimately becomes part of the public domain through no fault of
Publisher or its employees; or
(iii) is independently developed by Publisher's employees who have not had
access to SCEA's Confidential Information, as proven by written documentation of
Publisher; or
(iv) is required to be disclosed by administrative or judicial action; provided
that Publisher must attempt to maintain the confidentiality of SCEA's
Confidential Information by asserting in such action the restrictions set forth
in this Agreement, and, immediately after receiving notice of such action or any
notice of any threatened action, Publisher most notify SCEA to give SCEA the
maximum opportunity to seek any other legal remedies to maintain such SCEA's
Confidential Information in confidence as herein provided; or
(v) is approved for release by written authorization of SCEA.
13.1.5 No Obligation to License. Disclosure of SCEA's Confidential
Information to Publisher shall not constitute any option, grant or license from
SCEA to Publisher under any patent or other SCEA Intellectual Property Rights
now or hereinafter held by SCEA. The disclosure by SCEA to Publisher of SCEA's
Confidential Information hereunder shall not result in any obligation on the
part of SCEA to approve any materials of Publisher hereunder or otherwise, nor
shall such disclosure by SCEA give Publisher any right to, directly or
indirectly, develop, manufacture or sell any product derived from or which uses
any of SCEA's Confidential Information, other than as expressly set forth in
this Agreement.
13.1.6 Publisher's Obligations Upon Unauthorized Disclosure. If at any time
Publisher becomes aware of any unauthorized duplication, access, use, possession
or knowledge of any SCEA's Confidential Information, it shall notify SCEA as
soon as reasonably practicable, and shall promptly act to recover any such
information and prevent further breach of the confidentiality obligations
herein. Publisher shall provide any and all reasonable assistance to SCEA to
protect SCEA's proprietary rights in any of SCEA's Confidential Information that
it or its employees or permitted subcontractors may have directly or indirectly
disclosed or made available, and that maybe duplicated, accessed, used,
possessed or known in a manner or for a purpose not expressly authorized by this
Agreement, including but notlimited to enforcement of confidentiality
agreements, commencement and prosecution in good faith (alone or with the
disclosing party) of legal action, and reimbursement for all reasonable
attomeys' fees, costs and expenses incurred by SCEA to protect its proprietary
rights in SCEA's Confidential Information. Publisher shall take all steps
requested by SCEA to prevent the recurrence of any unauthorized duplication,
access, use, possession or knowledge of SCEA's Confidential Information. In
addition, SCEA shall have the right to pursue any actions at law or in equity,
including without limitation the remedies set forth in Section 16.10 hereto.
13.2 Publisher's Confidential Information.
13.2.1 Definition of Publisher's Confidential Information. "Publisher's
Confidential Information" shall mean:
(i) any Product Software as provided to SCEA pursuant to this Agreement and all
documentation and information relating thereto, including Product Proposals,
Printed Materials and Advertising Materials (other than documentation and
information intended for use by and release to end users, the general public or
the trade);
(ii) other documents and materials developed, owned, licensed or under the
control of Publisher, including all processes, data, hardware, software,
inventions, trade secrets, ideas, creations, improvements, designs, discoveries,
developments, research and know-how; and
(iii) information and documents regarding Publisher's finances, business,
marketing and technical plans, business methods and production plans.
Publisher's Confidential Information may consist of information in any medium,
whether oral, printed, in machine-readable form or otherwise, including
information apprised to SCEA and reduced to tangible or written form at any time
during the term of this Agreement.
13.2.2 Term of Protection of Publisher's Confidential Information. The term
for the protection of Publisher's Confidential Information shall commence on the
Effective Date first above written and shall continue in full force and effect
as long as any of Publisher's Confidential Information continues to be
maintained as confidential and proprietary by Publisher.
13.2.3 Preservation of Confidential Information of Publisher. SCEA shall,
with respect to Publisher's Confidential Information:
(i) hold all Publisher's Confidential Information in confidence, and shall
take all reasonable steps to preserve the confidentiality of Publisher's
Confidential Information, and to prevent it from falling into the public domain
19 CONFIDENTIAL
or into the possession of persons other than those persons to whom disclosure is
authorized hereunder.
(ii) not disclose Publisher's Confidential Information to any person other than
an SCEA employee or subcontractor who needs to know or have access to such
Confidential Information for the purposes of this Agreement, and only to the
extent necessary for such purpose,
(iii) ensure that all written materials relating to or containing Publisher's
Confidential Information be maintained in a secure area and plainly marked to
indicate the secret and confidential nature thereof.
(iv) at Publisher's request, return promptly to Publisher any and all portions
of Publisher's Confidential Information, together with all copies thereof.
(v) not use Publisher's Confidential Information, or any portion thereof,
except as provided herein, nor shall SCEA remove any proprietary legend set
forth on or contained within any of Publisher's Confidential Information.
13.2.4 Exceptions. The foregoing restrictions will not apply to any
portion of Publisher's Confidential Information which:
(i) was previously known to SCEA without restriction on disclosure or use, as
proven by written documentation of SCEA; or
(ii) is or legitimately becomes part of information in the public domain
through no fault of SCEA, its employees or its subcontractors; or
(iii) is independently developed by SCEA's employees or affiliates who have not
had access to Publisher's Confidential Information, as proven by written
documentation of SCEA; or
(iv) is required to be disclosed by administrative or judicial action; provided
that SCEA attempted to maintain the confidentiality of Publisher's Confidential
Information by asserting in such action the restrictions set forth in this
Agreement, and immediately after receiving notice of such action, notified
Publisher of such action to give Publisher the opportunity to seek any other
legal remedies to maintain such Publisher's Confidential Information in
confidence as herein provided; or
(vi) is approved for release by written authorization of Publisher.
13.2.5 SCEA's Obligations Upon Unauthorized Disclosure. If at any time SCEA
becomes aware of any unauthorized duplication, access, use, possession or
knowledge of any of Publisher's Confidential Information, it shall notify
Publisher as soon as isreasonably practicable. SCEA shall provide any and all
reasonable assistance to Publisher to protect Publisher's proprietary rights in
any of Publisher's Confidential Information that it or its employees or
permitted subcontractors may have directly or indirectly disclosed or made
available and that may be duplicated, accessed, used, possessed or known in a
manner or for a purpose not expressly authorized by this Agreement including but
not limited to enforcement of confidentiality agreements, cornmencement and
prosecution in good faith (alone or with the disclosing party) of legal action,
and reimbursement for all reasonable attorneys' fees, costs and expenses
incurred by Publisher to protect its proprietary rights in Publisher's
Confidential Information. SCEA shall take all reasonable steps requested by
Publisher to prevent the recurrence of any unauthorized duplication, access,
use, possession or knowledge of Publisher's Confidential Information.
13.3 Confidentiality of Agreement. The terms and conditions of this
Agreement shall be treated as SCEA's Confidential Information and Publisher's
Confidential Information; provided that each party may disclose the terms and
conditions of this Agreement:
(i) to legal counsel;
(ii) in confidence, to accountants, banks and financing sources and their
advisors;
(iii) in confidence, in connection with the enforcement of this Agreement or
rights arising under or relating to this Agreement; and
(iv) if required, in the opinion of counsel, to file publicly or otherwise
disclose the terms of this Agreement under applicable federal and/or state
securities or other laws, the disclosing party shall be required to promptly
notify the other party such that the other party has a reasonable opportunity to
contest or limit the scope of such required disclosure, and the disclosing party
shall request, and shall use its best efforts to obtain, confidential treatment
for such sections of this Agreement as the other party may designate.
14. Term and Termination.
14.1 Effective Date; Term. This Agreement shall not be binding on the parties
until it has been signed by each party, in which event it shall be effective
from the Effective Date until March 31, 2003, unless earlier terminated pursuant
to Section 14.2. The term shall be automatically extended for additional
one-year terms thereafter, unless either party provides the other with written
notice of its election not to so extend on or before January 31 of the
applicable year. Notwithstanding the foregoing the term for the protection of
SCEA's Confidential Information and Publisher's Confidential
20 CONFIDENTIAL
Information shall be as set forth in Sections 13.1.2 and 13.2.2 respectively.
14.2 Termination by SCEA. SCEA shall have the right to terminate this
Agreement immediately, by providing written notice of such election to
Publisher, upon the occurrence of any of the following:
(i) If Publisher breaches (A) any of its obligations hereunder; or (B) any
other agreement entered into between SCEA or Affiliates of SCEA and Publisher.
(ii) The liquidation or dissolution of Publisher or a statement of intent by
Publisher to no longer exercise any of the rights granted by SCEA to Publisher
hereunder.
(iii) If during the term of this Agreement, a controlling interest in Publisher
or in an entity which directly or indirectly has a controlling interest in
Publisher is transferred to a party that (A) is in breach of any agreement with
SCEA or an Affiliate of SCEA; (B) directly or indirectly holds or acquires a
controlling interest in a third party which develops any interactive device or
product which is directly or indirectly competitive with the System; or (C) is
in litigation with SCEA or Affiliates of SCEA concerning any proprietary
technology, trade secrets or other SCEA Intellectual Property Rights or SCEA's
Confidential Information. As used in this Section 14.2, "controlling interest"
means, with respect to any form of entity, sufficient power to control the
decisions of such entity.
(iv) If during the term of this Agreement, Publisher or an entity that directly
or indirectly has a controlling interest in Publisher enters into a business
relationship with a third party with whom Publisher materially contributes to
develop core components to an interactive device or product which is directly or
indirectly competitive with the System.
Publisher shall immediately notify SCEA in writing in the event that any of the
events or circumstances specified in this Section occur.
14.3 Product-by-Product Termination by SCEA. In addition to the events of
termination described in Section 14.2, above, SCEA, at its option, shall be
entitled to terminate, on a product-by-product basis, the licenses and related
rights herein granted to Publisher in the event that (a) Publisher fails to
notify SCEA promptly in writing of any material change to any materials
previously approved by SCEA in accordance with Section 5 or Section 6.1 hereto,
and such breach is not corrected or cured within thirty (30) days after receipt
of written notice of such breach; (b) Publisher uses a third party that fails to
comply with the requirements of Section 3 in connection with the development of
any Licensed Product; (c) any third party with whom Publisher has contracted for
the development of Executable Software breaches any of itsmaterial obligations
to SCEA pursuant to such third party's agreement with SCEA with respect to such
Licensed Product; or (d) Publisher cancels a Licensed Product or fails to
provide SCEA in accordance with the provisions of Section 5 above, with the
final version of the Executable Software for any Licensed Product within three
(3) months of the scheduled release date according to the Product Proposal
(unless a modified final delivery date has been agreed to by the parties), or
fails to provide work in progress to SCEA in strict accordance with the Review
Process in Section 5.3.
14.4 Options of SCEA in Lieu of Termination. As alternatives to terminating
this Agreement or a particular Licensed Product as set forth in Sections 14.2
and 14.3 above, SCEA may, at its option and upon written notice to Publisher,
take the following actions in lieu of terminating this Agreement. In the event
that SCEA elects either of these options, Publisher may terminate this Agreement
upon written notice to SCEA rather than allowing SCEA to exercise these options.
Election of these options by SCEA shall not constitute a waiver of or compromise
with respect to any of SCEA's rights under this Agreement and SCEA may elect to
terminate this Agreement with respect to any breach.
14.4.1 Suspension of Agreement. SCEA may suspend this Agreement, entirely
or with respect to a particular Licensed Product or program, for a set period of
time which shall be specified in writing to Publisher upon the occurrence of any
breach of this Agreement
14.4.2 Liquidated Damages. Whereas a minor breach of any of the events set
out below may not warrant termination of this Agreement, but will cause SCEA
damages in amounts difficult to quantify, SCEA may require Publisher to pay
liquidated damages of Twenty Thousand Dollars ($20,000) per event as follows:
(i) Failure to submit Advertising Materials to SCEA for approval (including any
required resubmissions);
(ii) Broadcasting or publishing Advertising Materials without receiving the
final approval or consent of SCEA;
(iii) Failure to make SCEA's requested revisions to Advertising Materials; or
(iv) Failure to comply with the SourceBook 2, Manufacturing Specifications or
Guidelines which relates in any way to use of Licensed Trademarks. Liquidated
damages shall be invoiced separately or on Publisher's next invoice for Licensed
Products. SCEA reserves the right to terminate this Agreement for breach in lieu
of seeking liquidated damages or in the event that liquidated damages are
unpaid.
21 CONFIDENTIAL
14.5 No Refunds. In the event of the termination of this Agreement in
accordance with any of the provisions of Sections 14.2 through 14.4 above, no
portion of any payments of any kind whatsoever previously provided to SCEA
hereunder shall be owed or be repayable to Publisher.
15. Effect of Expiration or Termination.
15.1 Inventory Statement. Within thirty (30) days of the date of expiration
or the effective date of termination with respect to any or all Licensed
Products or this Agreement, Publisher shall provide SCEA with an itemized
statement, certified to be accurate by an officer of Publisher, specifying the
number of unsold Units of the Licensed Products as to which such termination
applies, on a title-by-title basis, which remain in its inventory and/or under
its control at the time of expiration or the effective date of termination. SCEA
shall be entitled to conduct at its expense a physical inspection of Publisher's
inventory and work in process upon reasonable written notice during normal
business hours in order to ascertain or verify such inventory and inventory
statement.
15.2 Reversion of Rights. Upon expiration or termination and subject to
Section 15.3 below, the licenses and related rights herein granted to Publisher
shall immediately revert to SCEA, and Publisher shall cease from any further use
of SCEA's Confidential Information, Licensed Trademarks and Sony Materials and
any SCEA Intellectual Property Rights therein, and, subject to the provisions of
Section 15.3 below, Publisher shall have no further right to continue the
development, publication, manufacture, marketing, sale or distribution of any
Units of the Licensed Products, or to continue to use any Licensed Trademarks;
provided, however, that for a period of one year after termination, and subject
to all the terms of Section 13, and provided this Agreement is not terminated
due to a breach or default of Publisher, Publisher may retain such portions of
Sony Materials and SCEA's Confidential Information as SCEA in its sole
discretion agrees are required to support end users of Licensed Products but
must return these materials at the end of such one year period. Upon expiration
or termination, the licenses and related rights herein granted to SCEA by
Publisher shall immediately revert to Publisher, and SCEA shall cease from any
further use of Product Information and any Publisher Intellectual Property
Rights therein; provided that SCEA may continue the manufacture, marketing, sale
or distribution of any SCEA Demo Discs containing Publisher's Product
Information which Publisher had approved prior to termination.
15.3 Disposal of Unsold Units. Provided that this Agreement is not terminated
due to a breach or default of Publisher, Publisher may, upon expiration or
termination of this Agreement, sell off existing inventories of Licensed
Products, on a non-exclusive basis, for a period of ninety (90) days from the
date of expiration or termination of this Agreement, and provided such
inventories have not been manufactured solely or principally for sale during
such period. Subsequent to the expiration of such ninety (90) day period, or in
the event this Agreement is terminated as a result of any breach or default of
Publisher, any and all Units of the Licensed Products remaining in Publisher's
inventory shall be destroyed by Publisher within five (5) business days of such
expiration or termination. Within five (5) business days after such destruction,
Publisher shall provide SCEA with an itemized statement, certified to be
accurate by an officer of Publisher, indicating the number of Units of the
Licensed Products which have been destroyed (on a title-by-title basis), the
location and date of such destruction and the disposition of the remains of such
destroyed materials.
15.4 Return of Sony Materials and Confidential Information. Upon the
expiration or earlier termination of this Agreement, Publisher shall immediately
deliver to SCEA, or if and to the extent requested by SCEA destroy, all Sony
Materials and any and all copies thereof, and Publisher and SCEA shall, upon the
request of the other party, immediately deliver to the other party, or if and to
the extent requested by such party destroy, all Confidential Information of the
other party, including any and all copies thereof, which the other party
previously furnished to it in furtherance of this Agreement. Within five (5)
working days after any such destruction, Publisher and/or SCEA, as appropriate,
shall provide the other party with an affidavit of destruction and an itemized
statement, each certified to be accurate by an officer of Publisher, indicating
the number of copies and/or units of the Sony Materials and/or Confidential
Information which have been destroyed, the location and date of such destruction
and the disposition of the remains of such destroyed materials. In the event
that Publisher fails to return the Sony Materials or Confidential Information
and SCEA must resort to legal means (including without limitation any use of
attorneys) to recover the Sony Materials or Confidential Information or the
value thereof; all costs, including SCEA's reasonable attorney's fees, shall be
borne by Publisher, and SCEA may, in addition to SCEA's other remedies, withhold
such amounts from any payment otherwise due from SCEA to Publisher under any
agreement between SCEA and Publisher.
15.5 Extension of this Agreement; Termination Without Prejudice. SCEA shall
be under no obligation to extend this Agreement notwithstanding any actions
taken by either of the parties prior to the expiration of this Agreement. Upon
the expiration of this Agreement, neither party shall be liable to the other for
any damages (whether direct, indirect, consequential or incidental, and
including, without limitation, any expenditures, loss of profits or prospective
profits) sustained or arising out of or alleged to have been sustained or to
have arisen out of such expiration. The expiration or termination of this
Agreement shall be without prejudice to any rights or remedies which one party
22 CONFIDENTIAL
may otherwise have against the other party, and shall not excuse either party
from any such expiration or termination.
16. Miscellaneous Provisions.
16.1 Notices. All notices or other communications required or desired to be
sent to either of the parties shall be in writing and shall be sent by
registered or certified mail, postage prepaid, or sent by recognized mtemational
courier service, telegram or facsimile, with charges prepaid. The address for
all notices or other communications required to be sent to SCEA or Publisher,
respectively, shall be the mailing address stated in the preamble hereof or such
other address as may be provided by written notice from one party to the other
on at least ten (10) days' prior written notice. Any such notice shall be
effective upon the date of actual or tendered delivery, as confirmed by the
sending party.
16.2 Audit Provisions. Publisher shall keep full, complete, and accurate
books of account and records covering all transactions relating to this
Agreement. Publisher shall preserve such books of account, records, documents,
and material for a period of twenty-four (24) months after the expiration or
earlier termination of this Agreement. Acceptance by SCEA of an accounting
statement, purchase order, or payment hereunder will not preclude SCEA from
challenging or questioning the accuracy thereof at a later time. In the event
that SCEA reasonably believes that the Wholesale Price provided by Publisher
with respect to any Licensed Product is not accurate, SCEA shall be entitled to
request additional documentation from Publisher to support the listed Wholesale
Price for such Licensed Product. In addition, during the Tenn and for a period
of two (2) years thereafter and upon the giving of reasonable written notice to
Publisher, representatives of SCEA shall have access to, and the right to make
copies and summaries of, such portions of all of Publisher's books and records
as pertain to the Licensed Products and any payments due or credits received
hereunder. In the event that such inspection reveals an under-reporting of any
payment due to SCEA, Publisher shall immediately pay SCEA such amount. In the
event that any audit conducted by SCEA reveals that Publisher has under-reported
any payment due to SCEA hereunder by five percent (5%) or more for that audit
period, then in addition to the payment of the appropriate amount due to SCEA,
Publisher shall reimburse SCEA for all reasonable audit costs for that audit and
any and all collection costs to recover the unpaid amount.
16.3 Force Majeure. Neither SCEA nor Publisher shall be liable for any loss
or damage or be deemed to be in breach of this Agreement if its failure to
perform or failure to cure any of its obligations under this Agreement results
from any event or circumstance beyond its reasonable control, including, without
limitation, any natural disaster, her, flood, earthquake or other Act of God;
shortage of equipment, materials, supplies or transportation facilities;strike
or other industrial dispute; war or rebellion; shutdown or delay in power,
telephone or other essential service due to the failure of computer or
communications equipment or otherwise; provided, however, that the party
interfered with gives the other party written notice thereof promptly, and, in
any event, within fifteen (15) business days of discovery of any such Force
Majeure condition. If notice of the existence of any Force Majeure condition is
provided within such period, the time for performance or cure shall be extended
for a period equal to the duration of the Force Majeure event or circumstance
described in such notice, except that any such cause shall not excuse the
payment of any sums owed to SCEA prior to, during or after any such Force
Majeure condition. In the event that the Force Majeure condition continues for
more than sixty (60) days, SCEA may terminate this Agreement for cause by
providing written notice to Publisher to such effect.
16.4 No Agency. Partnership or Joint Venture. The relationship between SCEA
and Publisher, respectively, is that of licensor and licensee. Both parties are
independent contractors and are not the legal representative, agent, joint
venturer, partner or employee of the other party for any purpose whatsoever.
Neither party has any right or authority to assume or create any obligations of
any kind or to make any representation or warranty on behalf of the other party,
whether express or implied, or to bind the other party in any respect
whatsoever.
16.5 Assignment. SCEA has entered into this Agreement based upon the
particular reputation, capabilities and experience of Publisher and its
officers, directors and employees. Accordingly, Publisher may not assign this
Agreement or any of its rights hereunder, nor delegate or otherwise transfer any
of its obligations hereunder, to any third party unless the prior written
consent of SCEA shall first be obtained. This Agreement shall not be assigned in
contravention of Section 14.2 (iii). Any attempted or purported assignment,
delegation or other such transfer, directly or indirectly, without the required
consent of SCEA shall be void. Subject to the foregoing, this Agreement shall
inure to the benefit of the parties and their respective successors and
permitted assigns (other than under the conditions set forth in Section 14.2
(iii). SCEA shall have the right to assign any and all of its rights and
obligations hereunder to any Sony affiliate(s).
16.6 Subcontractors. Publisher shall not sell, assign, delegate, subcontract,
sublicense or otherwise transfer or encumber all or any portion of the licenses
herein granted without the prior written approval of SCEA, provided, however,
that Publisher may retain those subcontractors who provide services which do not
require access to Sony Materials or SCEA's Confidential Information without such
prior approval. Publisher may retain those subcontractor(s) to assist with the
23 CONFIDENTIAL
development, publication and marketing of Licensed Products (or portions
thereof) which have signed (i) an LPA or LDA with SCEA (the "PlayStation 2
Agreement") in full force and effect throughout the term of such development and
marketing; or (ii) an SCEA-approved subcontractor agreement ("Subcontractor
Agreement"); and SCEA has approved such subcontractor in writing, which approval
shall be in SCEA's sole discretion. Such Subcontractor Agreement shall provide
that SCEA is a third-party beneficiary of such Subcontractor Agreement and has
the full right to bring any actions against such subcontractors to comply in all
respects with the terms and conditions of this Agreement. Publisher shall
provide a copy of any such Subcontractor Agreement to SCEA prior to and
following execution thereof. Publisher shall not disclose to any subcontractor
any of SCEA's Confidential Information, including, without limitation, any Sony
Materials, unless and until either a PlayStation 2 Agreement or a Subcontractor
Agreement has been executed and approved by SCEA. Notwithstanding any consent
which may be granted by SCEA for Publisher to employ any such permitted
subcontractor(s), or any such separate agreement(s) that may be entered into by
Publisher with any such permitted subcontractor, Publisher shall remain fully
liable for its compliance with all of the provisions of this Agreement and for
the compliance of any and all permitted subcontractors with the provisions of
any agreements entered into by such subcontractors in accordance with this
Section. Publisher shall use its best efforts to cause its subcontractors
retained in furtherance of this Agreement to comply in all respects with the
terms and conditions of this Agreement, and hereby unconditionally guarantees
all obligations of its subcontractors. SCEA may subcontract any of its rights or
obligations hereunder.
16.7 Compliance with Applicable Laws. The parties shall at all times comply
with all applicable regulations and orders of their respective countries and
other controlling jurisdictions and all conventions and treaties to which their
countries are a party or relating to or in any may affecting this Agreement and
the performance by the parties of this Agreement. Each party, at its own
expense, shall negotiate and obtain any approval, license or permit required in
the performance of its obligations, and shall declare, record or take such steps
to render this Agreement binding, including, without limitation, the recording
of this Agreement with any appropriate governmental authorities (if required).
16.8 Governing Law; Consent to Jurisdiction. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of California,
excluding that body of law related to choice of laws, and of the United States
of America. Any action or proceeding brought to enforce the terms of this
Agreement or to adjudicate any dispute arising hereunder shall be brought in the
Superior Court of the County of San Mateo, State of California or the United
States District Court for the Northern District of California. Each of the
parties hereby submits itself to the exclusive jurisdiction and venue ofsuch
courts for purposes of any such action and agrees that any service of process
may be effected by delivery of the summons in the manner provided in the
delivery of notices set forth in Section 16.1 above. In addition, each party
hereby waives the right to a jury trial in any action or proceeding related to
this Agreement
16.9 Legal Costs and Expenses. In the event it is necessary for either party
to retain the services of an attorney or attorneys to enforce the terms of this
Agreement or to file or defend any action arising out of this Agreement, then
the prevailing party in any such action shall be entitled, in addition to any
other rights and remedies available to it at law or in equity to recover from
the other party its reasonable fees for attorneys and expert witnesses, plus
such court costs and expenses as may be fixed by any court of competent
jurisdiction. The term "prevailing party" for the purposes of this Section shall
include a defendant who has by motion, judgment, verdict or dismissal by the
court, successfully defended against any claim that has been asserted against
it.
16.10 Remedies. Unless expressly set forth to the contrary, either party's
election of any remedies provided for in this Agreement shall not be exclusive
of any other remedies, and all such remedies shall be deemed to be cumulative.
Any breach of Sections 3, 4, 5, 6.1, 11 and 13 of this Agreement would cause
significant and irreparable harm to SCEA, the extent of which would be difficult
to ascertain. Accordingly, in addition to any other remedies including without
limitation equitable relief to which SCEA may be entitled, in the event of a
breach by Publisher or any of its employees or permitted subcontractors of any
such Sections of this Agreement, SCEA shall be entitled to the immediate
issuance without bond of ex parte injunctive relief or, if a bond is required
under applicable law, on the posting of a bond in an amount not to exceed
$50,000, enjoining any breach or threatened breach of any or all of such
provisions. In addition, if Publisher fails to comply with any of its
obligations as set forth herein, SCEA shall be entitled to an accounting and
repayment of all forms of compensation, commissions, remuneration or benefits
which Publisher directly or indirectly realizes as a result of or arising in
connection with any such failure to comply. Such remedy shall be in addition to
and not in limitation of any injunctive relief or other remedies to which SCEA
may be entitled under this Agreement or otherwise at law or in equity. In
addition, Publisher shall indemnify SCEA for all losses, damages, liabilities,
costs and expenses (including reasonable attorneys' fees and all reasonable
related costs) which SCEA may sustain or incur as a result of any breach under
this Agreement.
16.11 Severability. In the event that any provision of this Agreement (or
portion thereof) is determined by a court of competent jurisdiction to be
invalid or otherwise unenforceable, such provision (or portion thereof) shall be
24 CONFIDENTIAL
enforced to the extent possible consistent with the stated intention of the
parties, or, if incapable of such enforcement, shall be deemed to be deleted
from this Agreement, while the remainder of this Agreement shall continue in
full force and remain in effect according to its stated terms and conditions.
16.12 Sections Surviving Expiration or Termination. The following sections
shall survive the expiration or earlier termination of this Agreement for any
reason: 4, 5.8, 6.2, 6.4, 8, 9, 10, II, 13, 14.5, 15, and 16.
16.13 Waiver. No failure or delay by either party in exercising any right,
power or remedy under this Agreement shall operate as a waiver of any such
right, power or remedy. No waiver of any provision of this Agreement shall be
effective unless in writing and signed by the party against whom such waiver is
sought to be enforced. Any waiver by either party of any provision of this
Agreement shall not be construed as a waiver of any other provision of this
Agreement, nor shall such waiver operate or be construed as a waiver of such
provision respecting any future event or circumstance.
16.14 Modification and Amendment. No modification or amendment of any
provision of this Agreement shall be effective unless in writing and signed by
both of the parties. Notwithstanding the foregoing, SCEA reserves the right to
modify the SourceBook 2 from time to time upon reasonable notice to Publisher.
16.15 Headings. The section headings used in this Agreement are intended
primarily for reference and shall not by themselves determine the construction
or interpretation of this Agreement or any portion hereof.
16.16 Integration. This Agreement, together with the SourceBook 2,
constitutes the entire agreement between SCEA and Publisher and supersedes all
prior or contemporaneous agreements, proposals, understandings and
communications between SCEA and Publisher, whether oral or written, with respect
to the subject matter hereof including any PlayStation 2 Confidentiality and
Nondisclosure Agreement and Materials Loan Agreement between SCEA and Publisher.
16.17 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and together shall constitute one and the
same instrument.
16.18 Construction. This Agreement shall be fairly interpreted in accordance
with its terms and without any strict construction in favor of or against either
of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first written above.
SONY COMPUTER ENTERTAINMENT AMERICA CONSPIRACY ENTERTAINMENT INC.
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxx Xxxxxx
Print Name: Xxxxxx Xxxxx Print Name: Xxxxx Xxxxxx
Title: Senior Vice President Title: President and CEO
Date: October 12, 2000 Date: October 3, 2000
NOT AN AGREEMENT UNTIL EXECUTED BY BOTH PARTIES
25 CONFIDENTIAL
PlayStationo2
Development System Agreement
This PlayStationo2 Development System Agreement (the "Agreement") is
entered into this 28th day of August, 2000 (the "Effective Date") by and between
Sony Computer Entertainment America Inc. ("SCEA") and Conspiracy Entertainment
("Company").
Definitions.
1.1 "Developer Website" shall mean a passworded secure website that SCEA
may establish to facilitate the dissemination of Software Tools and
Documentation.
1.2 "Development Tool(s)" shall mean the Hardware Tools, the Software Tools
and the Documentation.
1.3 "Documentation" shall mean all written materials that SCEA may provide
to Company that are associated with and describe the function of the Development
Tools.
1.4 "Firmware" shall mean all code embedded on any chip contained within
any Hardware Tool, as may be upgraded or changed from time to time.
1.5 "Hardware Tool(s)" shall mean hardware development system(s), as may be
updated or changed from time to time, that SCEA may sell to Company hereunder.
1.6 "Intellectual Property Rights" shall mean, by way of example but not by
way of limitation, all current and future worldwide patents and other patent
rights, copyrights, trademarks, service marks, trade names, mask work rights,
trade secret rights, technical information, know-how, and the equivalents of the
foregoing under the laws of any jurisdiction, and all other proprietary or
intellectual property rights throughout the universe, including without
limitation all applications and registrations with respect thereto, and all
renewals and extensions thereof.
1.7 "License Fee" shall mean the amount charged by SCEA for the license of
one (1) copy of the Software Tools, Firmware and/or Documentation.
1.8 "Order Form(s)" shall mean, collectively, the attached order form, as
it may be amended by SCEA from time to time.
1.9 "Software Tool(s)" shall mean the code and libraries, as may be updated
or changed from time to time, that SCEA may license to Company hereunder, but
shall not include that code that is subject to the GNU General Public License.
1.10 "Term" shall mean the period beginning on the Effective Date and
ending on March 31, 2003 to be automatically extended for additional one year
terms thereafter, unless either party provides the other with written notice on
or before January 31 of the applicable year of its election not to so extend.
1.11"Territory" shall mean the United States of America and Canada.
2. Purchase and Sale of Hardware Tools.
2.1 From time to time, Company may buy, and SCEA may sell, the Hardware
Tools that are listed in the Order Form.
2.2 The purchase price of each Hardware Tool is set forth in the Order
Form; Company shall pay any applicable sales, use or other taxes in connection
therewith. SCEA may change the price of any Hardware Tool at its discretion by
either providing Company with prior written notice of the price change or by
publicizing the new price(s) on SCEA's Company website. Unless otherwise agreed,
Company shall pay for the Hardware Tool(s) in full prior to delivery, and title
to all Hardware Tools shall remain with SCEA until SCEA has received full
payment.
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2.3 If SCEA extends credit terms to Company or facilitates third party
financing for Company, until Company makes payment in full for all items so
financed, Company (i) grants to SCEA or SCEA's designee a first position
purchase money security interest in each Hardware Tool and in the proceeds of
disposition of any Hardware Tool and (ii) shall not sell, hypothecate or
otherwise encumber any such Hardware Tool. Company shall execute and deliver to
SCEA or SCEA's designee such financing statements as may be required to perfect
the security interest, and SCEA or SCEA's designee may file such financing
statements in its discretion.
2.4 SCEA shall be free to accept or reject, in its discretion, any order of
Hardware Tools. SCEA does not warrant that Hardware Tools shall be available
when ordered. SCEA shall pay applicable shipping charges for all Hardware Tools
shipped; however, risk of loss to the Hardware Tools shall transfer to Company
upon SCEA's delivery of the Hardware Tools to SCEA's common carrier of choice.
2.5 If Company issues a written purchase order or any other documentation
purporting in any way to relate to this Agreement or the purchase of Hardware
Tools hereunder, that document as issued by Company shall be considered to be
for Company's internal use only, and the provisions of that document shall not
amend or modify this Agreement except as may be expressly agreed to by SCEA in
writing.
2.6 Prior to the Company shipping any Hardware Tool to SCEA, either
pursuant to an announced upgrade "swap" program or pursuant to the warranty
provisions set forth below, Company shall (i) securely delete any and all of
Company's applications software from the hard drive and/or other storage media
contained in the Hardware Tool and (ii) execute and provide to SCEA the written
certification form attached hereto.
2.7 All purchases made hereunder are final. In no event shall SCEA be
obligated to refund all or any portion of the purchase price ofthe Hardware
Tools.
2.8 Company shall not remove any sticker or legend that SCEA places on the
Hardware Tools.
2.9 Company acknowledges that the nontransferable license of the firmware
within the Hardware Tools may act, as a practical matter, as a restriction or
prohibition against the resale of the Hardware Tools.
3. License of Software Tools and Firmware.
3.1 SCEA grants to Company a nonexclusive, nontransferable, fully paid
license to use the Software Tools, Documentation and Firmware, within the
Territory and for the Term, solely:
3.1.1 For application developers and publishers, for the development of
PlayStation2 compatible content subject to the terms and conditions of (i)
sections 1, 2.1, 5.8, 6, 7 and 9 of an executed and existing Materials Loan
Agreement and/or (ii) a subsequent written license agreement to be entered into
by the parties hereto.
3.1.2 For tool and/or middleware developers, for the development of
tools and/or middleware subject to the terms and conditions of an executed and
existing "STANDARD TOOL AND MIDDLEWARE DEVELOPMENT AND LICENSE AGREEMENT FOR
PlayStation2" between Company and Sony Computer Entertainment Inc.
3.2 The License Fee for the Software Tools, Documentation and Firmware is
set forth in the Order Form, and may be subject to a sales tax charge
notwithstanding the fact that such items are not "sold" hereunder. The Software
Tools, Documentation and Firmware are, as a practical matter, "bundled" with the
Hardware Tools; Company must, in addition to the Hardware Tool purchase price,
pay one (1) License Fee for every Hardware Tool that it orders (but, pursuant to
section 3.3 below, may make multiple copies of the Software Tool to install on
those clients which are served by that Hardware Tool). Unless otherwise
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agreed, Company shall pay the License Fee in full prior to delivery or download.
3.3 Company is authorized to copy the libraries contained within the
Software Tools solely to the extent necessary to integrate the libraries into
such content. For each License Fee paid and accepted by SCEA, (i) SCEA shall
provide Company with one (1) copy of the Software Tools and Documentation and
may, in the future, make such Software Tools and/or Documentation available on a
Developer Website or through some other means of electronic distribution, and
(ii) Company is authorized only to make and install copies of the Software Tools
on multiple clients to be served by one (1) Hardware Tool. Company shall not
copy the Software Tools except as is specified above; Company may, however, make
and maintain one (1) copy per development site solely for archival and/or backup
purposes. Company shall not copy the Documentation; additional copies of the
Documentation may be ordered on the Order Form.
3.4 Other than as expressly permitted by SCEA in writing, Company shall
not directly or indirectly (i) disassemble, decrypt, electronically scan, peel
semiconductor components, decompile, or otherwise reverse engineer in any manner
or attempt to reverse engineer or derive source code from, all or any portion of
the Development Tools, or permit or encourage any third party to do so, (ii)
use, modify, reproduce, sublicense, distribute, create derivative works from, or
otherwise provide to third parties, the Development Tools, in whole or in part;
and/or (iii) sell, lease, assign, lend, license, copy, encumber or otherwise
transfer or dispose of any Software Tools or Documentation, or permit any
mortgage, pledge, lien, claim, charge, security interest or other encumbrance
with respect to the Software Tools or Documentation. The burden of proof under
this section shall be on Company, and SCEA reserves the right to require Company
to furnish evidence satisfactory to SCEA that Company has complied with this
section.
3.5 Subject to the rights granted by SCEA herein, all rights with respect
to the Software Tools, Documentation and Firmware,including, without limitation,
all of SCEA's Intellectual Property Rights therein, are and shall be the
exclusive property of SCEA and/or its affiliates. Nothing herein shall give
Company any right, title or interest in or to the Software Tools, Documentation
and/or Firmware (or any portion thereof), other than the non-exclusive license
and privilege during the term hereof to use them solely in accordance with the
provisions of this Agreement and other agreements to be entered into by the
parties hereto. Company shall not do or cause to be done any act or thing
contesting or in any way impairing or tending to impair any of SCEA's rights,
title, and/or interests in or to the Software Tools, Documentation and/or
Firmware (or any portion thereof).
3.6 During the Term and thereafter, Company shall not (i) apply for, seek
to obtain or assert, or (ii) challenge or attack, any Intellectual Property
Right in any part of the Software Tools, Documentation or Firmware.
3.7 Except as may be expressly granted herein, all other rights to the
Software Tools, Documentation and Firmware (including, but not limited to, the
right and license to market, promote, advertise and sell PlayStation2 related
content) are strictly reserved by SCEA.
4. Confidentiality. The confidentiality provisions of all written PlayStation2
related agreements previously entered into by the parties or their affiliates
are incorporated herein in full.
5. Warranties and Limitations of Liability.
5.1 SCEA warrants to Company that the Hardware Tools shall be free from
material defects for a period of 180 days from the date of receipt by Company
(the "Warranty Period"). In the event of such a defect within the Warranty
Period, SCEA shall -- at its option -- repair or replace the applicable Hardware
Tool at no charge to Company provided that (i) the request is made in writing
during the Warranty Period, (ii) Company has properly installed and used the
Hardware Tool, and (iii) Company has not modified the Hardware Tool. This
warranty shall be personal to Company only and shall be nontransferable.
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5.2 SCEA warrants to Company that the Software Tools and media shall be
free from material defects for the Warranty Period. In the event of a media
defect within the Warranty Period, SCEA shall replace the applicable Software
Tool at no charge to Company. In the event of a material defect within the
Software Tools themselves, SCEA will make reasonable efforts to remedy the
defect and provide Company with an updated version of the applicable Software
Tool. Following the Warranty Period, SCEA may (but shall not be obligated to)
provide extended warranty service for an additional fee.
5.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH ABOVE, NEITHER SCEA NOR ITS
AFFILIATES AND SUPPLIERS MAKE, NOR DOES COMPANY RECEIVE, ANY WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY REGARDING THE GOODS OR MATERIALS REFERENCED
HEREIN. SCEA AND ITS AFFILIATES AND SUPPLIERS EXPRESSLY DISCLAIM THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND THEIR
EQUIVALENTS UNDER THE LAWS OF ANY JURISDICTION, REGARDING THE HARDWARE TOOLS,
SOFTWARE TOOLS, DOCUMENTATION AND/OR FIRMWARE. ANY WARRANTY AGAINST INFRINGEMENT
THAT MAY BE PROVIDED IN SECTION 2-312(3) OF THE UNIFORM COMMERCIAL CODE AND/OR
IN ANY OTHER COMPARABLE STATUTE IS EXPRESSLY DISCLAIMED.
5.4 IN NO EVENT SHALL SCEA OR ITS AFFILIATES, SUPPLIERS, OFFICERS,
DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE FOR PROSPECTIVE PROFITS, OR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE BREACH OF THIS AGREEMENT
BY SCEA, THE USE OF THE HARDWARE TOOLS, SOFTWARE TOOLS, DOCUMENTATION AND/OR
FIRMWARE, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDINGNEGLIGENCE),
INDEMNITY, PRODUCT LIABILITY OR OTHERWISE. IN NO EVENT SHALL SCEA'S LIABILITY
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY FOR DIRECT DAMAGES, AND INCLUDING WITHOUT LIMITATION ANY LIABILITY
UNDER ANY LIMITED WARRANTY PROVISION ABOVE, EXCEED THE TOTAL AMOUNT PAID BY
COMPANY TO SCEA UNDER THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
NEITHER SCEA, NOR ANY AFFILIATE, NOR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES OR AGENTS, SHALL BEAR ANY RISK, OR HAVE ANY RESPONSIBILITY
OR LIABILITY, OF ANY KIND TO COMPANY OR TO ANY THIRD PARTIES WITH RESPECT TO THE
QUALITY AND/OR PERFORMANCE OF ANY PORTION OF THE MATERIALS PROVIDED HEREUNDER OR
THE CONTENT CREATED THROUGH THE USE THEREOF.
6. Use of the Software Tools.
6.1 Company may use and store the Software Tools and Documentation solely
at the development site listed on the Order Form or other location approved in
writing by SCEA (the "Development Site") and ensure that they are accessible
only to, and used only by, those employees and subcontractors entitled to use
such materials. In the event that Company wishes to change the Development Site,
it shall obtain SCEA's prior written approval thereto. Company must preserve any
other proprietary rights notices placed on the Development Tools by SCEA and
must place all such notices on any copies made as permitted by the terms hereof.
6.2 Company may provide the Software Tools and Documentation to any
contractor that (i) is preapproved by SCEA in writing and (ii) has executed a
written agreement with Company that contains substantially all of the terms and
conditions of this Agreement and that makes SCEA an express intended third party
beneficiary of Company's rights thereunder. Notwithstanding such a written
subcontracting agreement, Company shall be jointly and severally responsible for
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all of the acts and omissions of its subcontractors. intellectual property
rights or confidential information of SCEA.
6.3 The designee named on the applicable Order Form (the "Company
Designee") shall act as the designated caretaker of the Development Tools. The
Company Designee shall be responsible for receiving all materials hereunder,
overseeing that the terms of this section 6 are fulfilled and shall act as the
Company contact for matters related to the Development Tools. In the event that
Company wishes to appoint a new Company Designee, it shall give SCEA written
notice ten (10) days prior to the change.
6.4 SCEA may, upon reasonable notice to Company, inspect the Development
Site in order to audit the use of the Software Tools and Documentation during
Company's normal business hours in order to verify that Company is complying
with its obligations hereunder. In addition, at SCEA's request, Company shall
prepare and provide SCEA with an inventory report of Software Tools and
Documentation in its possession within thirty (30) days of such request,
detailing each by serial number and current physical location.
7. Termination.
7.1 SCEA may terminate this Agreement immediately, upon written notice to
Company: (i) upon a breach of any term of this Agreement or any other agreement
between Company and SCEA; (ii) upon the liquidation or dissolution of Company,
or a statement of intent by Company to no longer exercise any of the rights
granted by SCEA to Company hereunder, or (iii) if, during the term of this
Agreement, a controlling interest in Company or a controlling interest in an
entity which has, directly or indirectly, a controlling interest in Company is
transferred to a party that (A) is in breach of any agreement with SCEA or an
affiliate of SCEA; (B) directly or indirectly holds or acquires a controlling
interest in a third party which develops any interactive device or product which
is directly or indirectly competitive with the PlayStation2 console; or (C) is
in litigation with SCEA or affiliates of SCEA concerning any proprietary
technology, trade secrets or other
7.2 Immediately upon termination or expiration of this Agreement, all
rights granted hereunder shall revert to SCEA, Company shall no longer use the
Development Tools or Documentation, and Company shall promptly deliver to SCEA
-- at Company's expense and without any right to refund or reimbursement -- all
Software Tools and Documentation in its possession, custody or control.
8. Indemnification.
8.1 SCEA shall indemnify and hold Company harmless from and against any
and all claims, losses, liabilities, damages, expenses and costs, including,
without limitation, reasonable fees for attorneys, expert witnesses and
litigation costs, and including costs incurred in the settlement or avoidance of
any such claim which result from or are in connection with a breach of any of
the representations or warranties provided by SCEA herein; provided, however,
that Company shall give prompt written notice to SCEA of the assertion of any
such claim, and provided, further, that SCEA shall have the right to select
counsel and control the defense and settlement thereof. SCEA shall have the
exclusive right, at its discretion, to commence and prosecute at its own expense
any lawsuit or to take such other action with respect to such matters as shall
be deemed appropriate by SCEA. Company shall provide SCEA, at no expense to
Company, reasonable assistance and cooperation concerning any such matter; and
Company shall not agree to the settlement of any such claim, action or
proceeding without SCEA's prior written consent.
8.2 Company shall indemnify and hold SCEA harmless from and against any and
all claims, losses, liabilities, damages, expenses and costs, including, without
limitation, reasonable fees for attorneys, expert witnesses and litigation
costs, and including costs incurred in the settlement or avoidance of any such
claim, which result from or are in connection with (i) a breach of any of the
provisions of this Agreement, or (ii) any claims of or in connection with any
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personal or bodily injury (including death) or property damage, by whomever such
claim is made, arising out of, in whole or in part, the use of any of the
Development Tools hereunder, unless due directly to the breach of SCEA in
performing any of the specific duties and/or providing any of the specific
services required of it hereunder. SCEA shall give prompt written ,notice to
Company of the assertion of any indemnified claim, and SCEA shall have the right
to select counsel and reasonably control the defense and/or settlement thereof.
9. General Provisions.
9.1 Notices. All notices or other communications required or desired to be
sent to either of the parties shall be in writing to the address set forth on
the attached order form, and shall be sent by registered or certified mail,
postage prepaid, return receipt requested, or sent by recognized international
courier service (e.g., Federal Express, DHL, etc.), telex, telegram or
facsimile, with charges prepaid and subject to confirmation by letter sent via
registered or certified mail, postage prepaid, return receipt requested. Any
such notice shall be effective upon the date of receipt.
9.2 Force Majeure. Neither SCEA nor Company shall be liable for any loss or
damage or be deemed to be in breach of this Agreement if its failure to perform
or failure to cure any of its obligations under this Agreement results from any
event or circumstance beyond its reasonable control, including, without
limitation, any natural disaster, fire, flood, earthquake, or other Act of God;
shortage of equipment, materials, supplies, or transportation facilities; strike
or other industrial dispute; war or rebellion; or shutdown or delay in power,
telephone or other essential service due to the failure of computer or
communications equipment or otherwise; provided, however, that the party
interfered with gives the other party written notice thereof promptly, and, in
any event, within fifteen (15) business days of discovery of any such Force
Majeure condition. If notice of the existence of any Force Majeure condition is
provided within such period, the time for performance or cure shall be extended
for a period equal to the duration of the Force Majeure event orcircumstance
described in such notice, except that any such cause shall not excuse the
payment of any sums owed to SCEA prior to, during, or after any such Force
Majeure condition.
9.3 No Partnership or Joint Venture. The relationship between SCEA and
Company, respectively, is that of licensor and licensee. Company is an
independent contractor and is not the legal representative, agent, joint
venturer, partner, or employee of SCEA for any purpose whatsoever. Neither party
has any right or authority to assume or create any obligations of any kind or to
make any representation or warranty on behalf of the other party, whether
express or implied, or to bind the other party in any respect whatsoever.
9.4 Assignment. SCEA has entered into this Agreement based upon the
particular reputation, capabilities and experience of Company and its officers,
directors and employees. Accordingly, Company may not assign this Agreement or
any of its rights hereunder, nor delegate or otherwise transfer any of its
obligations hereunder, to any third party unless the prior written consent of
SCEA shall first be obtained. Any attempted or purported assignment, delegation
or other such transfer without the required consent of SCEA shall be void.
Subject to the foregoing, this Agreement shall inure to the benefit of the
parties and their respective successors and permitted assigns. SCEA shall have
the right to assign any and all of its rights and obligations hereunder to any
affiliate(s).
9.5 Compliance with Applicable Laws. The parties shall at all times comply
with all applicable regulations and orders of their respective countries and all
conventions and treaties to which their countries are a party or relating to or
in any way affecting this Agreement and the performance by the parties of this
Agreement. Each party, at its own expense, shall negotiate and obtain any
approval, license or permit required in the performance of its obligations, and
shall declare, record or take such steps to render this Agreement binding,
including, without limitation, the recording of this Agreement with any
appropriate governmental authorities (if required).
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9.6 Governing Law: Consent to Jurisdiction. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of California,
excluding that body of law related to choice of laws, and of the United States
of America. Any action or proceeding brought to enforce the terms of this
Agreement or to adjudicate any dispute arising hereunder shall be brought in the
courts of San Mateo county, California or the Northern District of California.
Each of the parties hereby submits itself to the exclusive jurisdiction and
venue of such courts for purposes of any such action, waives forum non
conveniens and similar defenses, and agrees that any service of process may be
effected by delivery of the summons in the manner provided in the delivery of
notices set forth in section 9.1 above. In addition, each party hereby waives
the right to a jury trial in any action or proceeding related to this Agreement.
9.7 Legal Costs and Expenses. In the event it is necessary for either party
to retain the services of an attorney or attorneys to enforce the terms of this
Agreement or to file or defend any action arising out of this Agreement, then
the prevailing party in any such action shall be entitled, in addition to any
other rights and remedies available to it at law or in equity to recover from
the other party its reasonable fees for attorneys and expert witnesses, plus
such court costs and expenses as may be fixed by any court of competent
jurisdiction.
9.8 Remedies. Unless expressly set forth to the contrary, either party's
election of any remedies provided for in this Agreement shall not be exclusive
of any other remedies available hereunder or otherwise at law or in equity, and
all such remedies shall be deemed to be cumulative. Any breach of Sections 2, 3,
4 or 6 of this Agreement would cause irreparable harm to SCEA, the extent of
which would be difficult to ascertain. Accordingly, Company agrees that, in
addition to any other remedies to which SCEA may be entitled, in the event of a
breach by Companyor any of its employees or permitted subcontractors of any such
sections of this Agreement, SCEA shall be entitled to the immediate ex parte
issuance of injunctive relief --upon the posting of a bond not to exceed U.S.
$50,000.00, enjoining any breach or threatened breach of any or all of such
provisions. In addition, Company shall indemnify SCEA for all losses, damages,
liabilities, costs and expenses (including actual attorneys' fees and all
related costs) which SCEA may sustain or incur as a result of such breach.
9.9 Severability. In the event that any provision of this Agreement (or
portion thereof) is determined by a court of competent jurisdiction to be
invalid or otherwise unenforceable, such provision (or part thereof) shall be
enforced to the extent possible consistent with the stated intention of the
parties, or, if incapable of such enforcement, shall be deemed to be deleted
from this Agreement, while the remainder of this Agreement shall continue in
full force and remain in effect according to its stated terms and conditions.
9.10 Sections Surviving Expiration or Termination. The following sections
shall survive the expiration or earlier termination of this Agreement for any
reason: 1, 3, 4, 5, 7, 8 and 9.
9.11 Waiver. No failure or delay by either party in exercising any right,
power, or remedy under this Agreement shall operate as a waiver of any such
right, power, or remedy. No waiver of any provision of this Agreement shall be
effective unless in writing and signed by the party against whom such waiver is
sought to be enforced. Any waiver by either party of any provision of this
Agreement shall not be construed as a waiver of any other provision of this
Agreement, nor shall such waiver operate as or be construed as a waiver of such
provision respecting any future event or circumstance.
9.12 Modification. No modification of any provision of this Agreement shall
be effective unless in writing and signed by both of the parties.
9.13 Headings. The section headings used in this Agreement are intended
primarily for reference and shall not by themselves determine the construction
or interpretation of this Agreement or any portion hereof.
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9.14 Integration. This Agreement (together with Order Forms and the
Nondisclosure Agreement) constitutes the entire agreement between SCEA and
Company and supersedes all prior or contemporaneous agreements, proposals,
understandings, and communications between SCEA and Company, whether oral or
written, with respect to the subject matter hereof.
9.15 Counterparts. This Agreement may be executed in two counterparts, by
facsimile, each of which shall be deemed an original, and both of which together
shall constitute one and the same instrument.
9.16 Construction. This Agreement shall befairly interpreted in accordance
with its terms and without any strict construction in favor of or against either
of the parties.
9.17 Export. Company acknowledges that all Hardware Tools, Software Tools and
Documentation are subject to U.S. export control restrictions and, additionally,
may have been imported by SCEA under import documentation that indicates the
destination country of use. Company certifies, therefore, that it shall not
reexport, directly or indirectly, any Development Tool in violation of U.S. law
and regulations. If for any reason Company does reexport any Development Tool,
Company shall be exporter of record and shall be solely responsible for the
obtaining of or compliance with any required export licenses. Prohibited sales
and/or deliveries may subject Company to fines and imprisonment under applicable
U.S. law.
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first written above.
SONY COMPUTER ENTERTAINMENT AMERICA CONSPIRACY ENTERTAINMENT INC.
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxx Xxxxxx
Print Name: Xxxxxx Xxxxx Print Name: Xxxxx Xxxxxx
Title: Senior Vice President Title: President and CEO
Date: October 12, 2000 Date: October 3, 2000
[Neither an offer nor an agreement until executed by both parties]
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