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Exhibit 10.26
(Confidential Portions Omitted)
LICENSED PUBLISHER AGREEMENT
LICENSED PUBLISHER AGREEMENT, entered into as of the 2nd day of February 2000
(the "Agreement" or "LPA"), by and between SONY COMPUTER ENTERTAINMENT AMERICA,
a division of Sony Computer Entertainment America Inc., with offices at 000 X.
Xxxxxxxxx Xxxxxxxxx, Xxxxxx Xxxx, XX 00000 (hereinafter "SCEA"), and BAM!, with
offices at 000 Xxxx Xxxxx Xxxxx Xxxxxx, Xxxxx 000 Xxx Xxxx, XX 00000
(hereinafter "Publisher").
WHEREAS, SCEA and/or affiliated companies have developed a CD-based interactive
console for playing video games and for other entertainment purposes known as
the PlayStation(R) game console (hereinafter referred to as the "Player") and
also own or have the right to grant licenses to certain intellectual property
rights used in connection with the Player.
WHEREAS, Publisher desires to be granted a non-exclusive license to publish,
have manufactured, market, distribute and sell Licensed Products (as defined
below) pursuant to the terms and conditions set forth in this Agreement.
WHEREAS, SCEA is willing, on the terms and subject to the conditions of this
Agreement, to grant Publisher the desired non-exclusive license to publish,
have manufactured, market, distribute and sell Licensed Products in accordance
with the terms and conditions of this Agreement.
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 the Licensed Products, or any other
advertising, merchandising, promotional, public relations (including press
releases) and display materials depicting any of the Licensed Trademarks.
1.2 "Affiliate of SCEA" means, as applicable, either Sony Computer
Entertainment Inc. in Japan, Sony Computer Entertainment Europe in the United
Kingdom or such other Sony Computer Entertainment entity as may be established
by Sony Computer Entertainment Inc. from time to time.
1.3 "CD Magazine" means a magazine in PlayStation Disc format to be
produced by SCEA, which incorporates first and third party Product
Information, in addition to hints and tips, interviews and other SCEA and
Player-related information, and which will be sold to subscribers and other
consumers or used for other promotional purposes of SCEA.
1.4 "Consumer Promotional Disc Program" shall have the meaning set forth
in Section 1.36 hereto.
1.5 "Designated Manufacturing Facility" means a manufacturing facility
which is designated by SCEA in its sole discretion to manufacture Licensed
Products and/or component parts for the Player, which may include manufacturing
facilities owned and operated by affiliated companies of SCEA.
1.6 "Development Tools" means the development tools leased and licensed
by SCEA to a Licensed Developer pursuant to a Licensed Developer Agreement for
use in the development of Executable Software.
1.7 "Executable Software" means Publisher's object code software which
include Licensed Developer Software and any software (whether in object code or
source code form) provided directly or indirectly by SCEA or an Affiliate of
SCEA which is intended to be combined with Licensed Developer Software for
execution on the Player and has the ability to communicate with the software
resident in the Player.
1.8 "Generic Line" shall have the meaning set forth in Section 8.3 hereto.
1.9 "Guidelines" shall mean SCEA's Guidelines with respect to its
Intellectual Property Rights, which may be set forth in the SourceBook or in
other documentation provided by SCEA to Publisher.
1.10 "Hit Title Rebate" shall have the meaning set forth in Exhibit A,
Section C hereto.
1.11 "Intellectual Property Rights" means, 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, trade dress, 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.
1.12 "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.
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1.13 "Licensed Developer" means any developer which is licensed by SCEA or
an Affiliate of SCEA to develop Licensed Products pursuant to a valid and then
current Licensed Development Agreement.
1.14 "Licensed Developer Agreement" or "LDA" means a valid and current
agreement or renewal thereof between a Licensed Developer and SCEA, or an
equivalent such agreement between a Licensed Developer and an Affiliate of
SCEA (e.g., the LDA with SCEE).
1.15 "Licensed Developer Software" means Licensed Developer's application
source code and data (including audio and video material) developed by a
Licensed Developer in accordance with its LDA, which, either by itself or
combined with other Licensed Developer Software, when integrated with any
software (whether in object code or source code form) provided by SCEA or an
Affiliate of SCEA, creates Executable Software.
1.16 "Licensed Products" means the Executable Software (which may be
combined with Executable Software of two or more Licensed Developers) which
has been approved by SCEA in accordance with the terms and conditions of this
Agreement, and which is embodied on CD-ROM media in the form of PlayStation
Discs.
1.17 "Licensed Publisher" means any publisher which is licensed by SCEA
to publish, have manufactured, market, distribute and sell Licensed Products
pursuant to a valid and then current Licensed Publisher Agreement.
1.18 "Licensed Publisher Agreement" or "LPA" means a valid and current
agreement or renewal thereof between a Licensed Publisher and SCEA.
1.19 "Licensed Territory" means the United States (including its
possessions and territories), Canada and Mexico, as may be modified and/or
supplemented by SCEA from time to time pursuant to Section 4.4 below.
1.20 "Licensed Trademarks" means the trademarks, service marks, trade
dress and logos designated by SCEA in the SourceBook or other documentation
provided by SCEA to Publisher as being licensed to Publisher. Nothing contained
in this Agreement shall in any way grant Publisher the right to use the
trademark "Sony" in any manner as a trademark, trade name, service xxxx or
logo. SCEA may amend such Licensed Trademarks from time to time in the
SourceBook or other documentation provided by SCEA to Publisher or upon written
notice to Publisher.
1.21 "Manufacturing Specifications" means specifications setting forth
terms relating to the manufacturing and assembly of Licensed Products,
Packaging, Printed Materials and their component parts, which shall be set
forth in the SourceBook or other documentation provided by SCEA to Publisher.
1.22 "Master Disc" means a gold CD-ROM disc in the form requested by SCEA
containing the final pre-production Executable Software for a Licensed Product,
which has been approved by SCEA pursuant to Section 5.4 and meets the
Manufacturing Specifications.
1.23 "Official Magazine Demo" means a demo disc in PlayStation Disc
format, to be produced by SCEA, containing first and third party Product
Information, which will be "packed-in" to any official PlayStation magazine of
SCEA or used for other promotional purposes of SCEA.
1.24 "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 container) or
parts thereof (including any portion of the jewel case containing Licensed
Trademarks), but excluding Printed Materials and PlayStation Discs.
1.25 "Pack-in Sampler Disc" means a demo disc in PlayStation Disc format
to be produced by SCEA, containing first and third party Product Information,
which shall be "packed-in" to the Player hardware box or used for other
promotional purposes of SCEA.
1.26 "PlayStation Discs" means the distinctive black PlayStation
interactive software CD-ROM discs compatible with the Player which are
manufactured on behalf of Publisher which contain the Licensed Product or SCEA
Demo Discs.
1.27 "Printed Materials" means all artwork and mechanicals set forth on
the CD label of the PlayStation Disc relating to the Licensed Product and on or
inside the jewel case (or other container) and/or if applicable, on or inside
the box (or other) Packaging for the Licensed Product, and all instructional
manuals, liners, inserts, trade dress and other user information and/or
materials to be inserted into the jewel case and/or other Packaging.
1.28 "Product Information" means either (i) object code of a Licensed
Product representing a playable portion of such Licensed Product ("Demo"); or
(ii) a representative video sample of the Licensed Product; (iii) other
Licensed Product related information, including but not limited to hints and
tips, artwork, depictions of Licensed Product cover art, videotaped interviews,
etc. With respect to Product Information provided in Demo form, the Demo
delivered shall not consist of a complete game and shall be, at a minimum, an
amount sufficient to demonstrate the game's core features and value, without
providing too much game play so as to give the consumer a disincentive to
purchase the complete Licensed Product, and such Demo shall also include any
required Legal Copy on the title screen.
1.29 "Purchase Order" means a written purchase order processed in
accordance with SCEA's instructions provided in this Agreement or provided
separately by SCEA to Publisher.
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1.30 "Retail Sampler Disc" means a demo disc in PlayStation Disc format to
be produced by SCEA, which contains first and third party Product Information,
which will be sold at retail or used for other promotional purposes of SCEA.
1.31. "SCEA Demo Disc" means the SCEA developed and marketed demo discs,
including the CD Magazine, Official Magazine Demo, Pack-in Sampler Disc, Retail
Sampler Disc, and any other first party demo disc created by SCEA subsequent to
the date of this Agreement in which SCEA invites Licensed Publishers to
participate. Unless otherwise agreed in a separate agreement with Publisher,
SCEA shall not charge any fees or royalties to Publisher for inclusion in SCEA
Demo Discs.
1.32 "SCEA Established Third Party Demo Disc Programs" shall have the
meaning set forth in Section 1.36 hereto.
1.33 "SCEA Product Code" shall mean 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 hardware, data, object code, source code,
documentation (or any part(s) of any of the foregoing), including without
limitation any portion or portions of the Development Tools, which are provided
or supplied by SCEA or an Affiliate of SCEA to Publisher or any Licensed
Developer and/or other Licensed Publisher.
1.35 "SourceBook" means the SourceBook (or any other reference guide
containing information similar to the SourceBook but designated with a
different name) prepared by SCEA, which is provided separately to Publisher.
The SourceBook 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 "Third Party Demo Disc" means any demo disc in PlayStation Disc
format which contains Product Information and which SCEA has granted Publisher
permission to produce or which complies with the terms of an SCEA Established
Third Party Demo Disc Program. For purposes of this Agreement, "SCEA
Established Third Party Demo Disc Programs" shall include (i) the Consumer
Promotional Disc Program, whereby Publisher produces a sample disc, for
promotional use only and not for resale, to promote Licensed Products to
consumers by creating a sampler containing Product Information from multiple
Licensed Products or Product Information from a single Licensed Product; (ii)
the Trade Promotional Disc Program, whereby Publisher produces a sample disc
incorporating a beta version of Publisher's Licensed Products which have been
concept approved by SCEA, for promotional use only and not for resale, to
promote its Licensed Products to retailers, journalists and/or trade partners
prior to release of such Licensed Products and (iii) any other third party
demo disc program established by SCEA for Licensed Publishers in the future.
1.37 "Trade Promotional Disc Program" shall have the meaning set forth in
Section 1.36 hereto.
1.38 "Unit" means a copy of each individual Licensed Product game title
regardless of the number of PlayStation Discs constituting such Licensed
Product game title.
2. LICENSE GRANT.
SCEA hereby grants to Publisher, and Publisher hereby accepts, for the term of
this Agreement, within the Licensed Territory, under Intellectual Property
Rights owned or licensed by SCEA, a non-exclusive, non-transferable license,
without the right to sublicense (except as specifically provided herein), to
publish Licensed Products, which right to publish shall be limited to the
following rights and other rights set forth in this LPA: (i) to enter into
agreements with Licensed Developers and other third parties pursuant to
Sections 3 and 17.5 hereto to develop Licensed Products which have been
approved by SCEA in accordance with the terms of this LPA; (ii) to have such
Licensed Products manufactured in accordance with the terms of this LPA; (iii)
to market, distribute and sell such Licensed Products and to authorize others
to do so in accordance with the terms of this LPA; (iv) to use the Licensed
Trademarks strictly and only in connection with the marketing, packaging,
advertising and promotion of the Licensed Products, and subject to SCEA's right
of approval as provided herein; (v) to sublicense to end users the right to use
the Licensed Products for noncommercial purposes only and not for public
performance; and (vi) from time to time to participate by invitation of SCEA in
the "Third Party Greatest Hits" program on terms and conditions to be
determined and published by SCEA and separately agreed with Publisher.
3. DEVELOPMENT OF LICENSED PRODUCTS.
This LPA grants Publisher the right to publish, have manufactured, market,
distribute and sell Licensed Products, and does not authorize Publisher to
develop Licensed Products or to lease or license Development Tools from SCEA to
assist in such development. In order for Publisher to have Licensed Products
developed for the Player or to lease or license Development Tools from SCEA to
assist in such development, it must either (i) enter into a Licensed Developer
Agreement directly with SCEA or with an Affiliate of SCEA; or (ii) enter into
an agreement with a Licensed Developer for the development of Licensed
Products. Publisher may also publish, have manufactured, market, distribute
and/or sell Licensed Products for a Licensed Developer or another Licensed
Publisher pursuant to the terms of this Agreement.
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Publisher shall notify SCEA in writing of the identity of any third party or
Licensed Developer with whom it has contracted to develop, publish, have
manufactured, market, distribute and/or sell Licensed Products within thirty
(30) days of entering into an agreement or other arrangement with the third
party. Publisher shall have the responsibility for determining that any
developers or other third parties meet the criteria set forth herein. It shall
be considered a material breach of this LPA for Publisher to provide
Development Tools or other Sony Materials to an unlicensed developer or other
third party.
4. LIMITATIONS ON LICENSES; RESERVATION OF RIGHTS.
4.1 REVERSE ENGINEERING PROHIBITED. Publisher hereby agrees not to
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 (whether or not all or any portion of the Sony
Materials are integrated with Licensed Developer Software), or permit or
encourage any third party to do so. 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 this Agreement. Publisher shall be required in all cases to pay
royalties in accordance with Section 9 hereto to SCEA on any of Publisher's
products utilizing Sony Materials. 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 this Section has been complied with.
4.2 RESERVATION OF SCEA'S RIGHTS. The licenses granted in this Agreement
from SCEA to Publisher extend only to publishing, manufacturing, marketing,
distribution and sale of Licensed Products for use on the Player, in such
format as may be designated by SCEA. Without limiting the generality of the
foregoing and except as otherwise provided herein, Publisher shall not have the
right to distribute or transmit the Executable Software or the Licensed
Products (to the extent each includes Sony Materials) 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 interconnected computers or other devices.
This Agreement does not grant any right or license, under any Intellectual
Property Rights of SCEA 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. Publisher shall not
make use of any of the Sony Materials and/or any Intellectual Property Rights
or Licensed Trademarks related to the Sony Materials and/or Player (or any
portion thereof) except as authorized by and in compliance with the provisions
of this Agreement or as may be otherwise expressly authorized in writing by
SCEA. 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(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 Player is prohibited unless
expressly authorized in writing by SCEA.
4.3 RESERVATION OF PUBLISHER'S RIGHTS. Separate and apart from Sony
Materials licensed to Publisher hereunder, Publisher (or a Licensed Developer,
as determined between Publisher and such Licensed Developer) retains all
rights, title and interest in and to the Licensed Developer Software, including
without limitation, Publisher's (or Licensed Developer's) Intellectual Property
Rights therein, as well as all of Publisher's (or Licensed Developer's) rights
in any source code and other underlying material such as artwork and music
related thereto, created by Publisher (or Licensed Developer) and contained
therein, and nothing in this Agreement shall be construed to restrict the right
of Publisher to develop, distribute or transmit products incorporating the
Licensed Developer Software and such underlying material (separate and apart
from the Sony Materials) for any hardware platform or service other than the
Player or from using the Printed Materials or any 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.
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 country or countries from the Licensed
Territory if, in SCEA's reasonable judgment, the laws or enforcement of such
laws in such country or countries do not protect SCEA's 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 exercising such licenses in the deleted country or
countries. Publisher agrees to cease exercising such licenses, directly or
through subcontractors, in such deleted country or countries, by the end of the
period stated in such notice.
5. QUALITY STANDARDS FOR THE LICENSED PRODUCTS.
5.1 QUALITY ASSURANCE GENERALLY. The Licensed Products, including,
without limitation, the contents and title of each of the Licensed Products,
and/or Publisher's use of any of the 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 the Licensed Product to review such Licensed Product to ensure that it meets
SCEA's quality assurance standards. Publisher agrees that all Licensed Products
will be designed (if an original title for the Player)
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or modified (if a pre-existing title) to substantially utilize the particular
capabilities of the Sony Materials and the Player, including but not limited to
utilizing the software libraries and graphics capabilities of the Player.
5.2 PRODUCT PROPOSALS.
5.2.1 SUBMISSION OF PRODUCT PROPOSAL. Before Publisher contracts with
a Licensed Developer for the creation of Licensed Developer Software (or, if
Publisher is also a Licensed Developer, before Publisher commences programming
of the Licensed Developer Software) for each of the Licensed Products,
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") in accordance with the procedures specified in the
SourceBook. Such Product Proposal must consist of a complete description of the
proposed Licensed Product and such other information specified in the
SourceBook, including but not limited to the scheduled and/or anticipated
delivery date of final Executable Software, as well as any additional
information that SCEA may deem to be useful in evaluating the proposed licensed
Product, which may include samples of past work.
5.2.2 APPROVAL OF PRODUCT PROPOSAL. After SCEA's review of
Publisher's Product Proposal, Publisher will receive written notice of the
following possible statuses: (i) Approved; (ii) Conditional Approval; (iii)
Re-submission Requested; or (iv) Not Approved. Such statuses shall have the
meaning ascribed to them in the SourceBook, and may be changed from time to
time by SCEA in subsequent versions of the SourceBook. Any requested
re-submissions shall be made at Publisher's cost. If a Product Proposal is "Not
Approved", then Publisher cannot re-submit such Product Proposal without
significant, substantive revisions. In addition, if a Product Proposal as
submitted by any Licensed Publisher or Licensed Developer is "Not Approved" by
SCEA, it cannot be re-submitted by another Licensed Publisher or Licensed
Developer without significant, substantive revisions. Publisher shall notify
SCEA promptly in writing in the event of any material proposed change in any
portion of the 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. If
Publisher licenses a Licensed Product from a Licensed Developer, it shall
immediately notify SCEA of such license, and SCEA will inform Publisher as to
the status of the Product Proposal and Review Process for such Licensed Product
and this Agreement shall govern the approval process of such Licensed Product
after any such notification. SCEA shall have no obligation to approve any
Product Proposal submitted by Publisher, and any development conducted by or at
the direction of Publisher shall be at Publisher's own risk. 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 without reference to or reliance upon
Publisher's work.
5.3 REVIEW OF WORK-IN-PROGRESS. SCEA has the right pursuant to this
Agreement to require Publisher to submit to SCEA work-in-progress on the
Licensed Product at certain intervals throughout the development of such
Licensed Product and, upon written notice to Publisher, at any time during the
development process. Upon receipt by Publisher of "Approved" or "Conditional
Approval" status of the Licensed Product, 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 LICENSED PRODUCT. SCEA shall have the right to approve, reject
or require additional information with respect to each stage of the Review
Process, which shall not be unreasonably withheld or delayed by SCEA. 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, after
a reasonable cure period agreed to between SCEA and Publisher, is not
successfully met, SCEA shall have the right to revoke the approval of
Publisher's Product Proposal. No approval by SCEA of any particular stage of
the Review Process shall be deemed an approval of any other stage, nor shall
any such approval be deemed to constitute a waiver of any approval requirement
with respect to any other stage or any of SCEA's rights under this Agreement.
LICENSED PRODUCTS WHICH ARE CANCELED BY PUBLISHER OR ARE LATE IN MEETING THE
FINAL EXECUTABLE SOFTWARE STAGE OF THE REVIEW PROCESS BY MORE THAN THREE (3)
MONTHS (WITHOUT AGREEING WITH SCEA ON A MODIFIED FINAL EXECUTABLE SOFTWARE
DELIVERY DATE) ARE SUBJECT TO RE-SUBMISSION OF PRODUCT PROPOSAL, IN WHICH EVENT
SCEA MAY RE-APPROVE OR DISAPPROVE SUCH PRODUCT PROPOSAL. The "Approved" or
"Conditional Approval" status of the Product Proposal shall not be construed by
Publisher as full approval of all elements of such Licensed Product, or as a
commitment by SCEA to grant final approval to the Licensed Product. 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, in addition to the provisions set forth in this Section,
subject Publisher to the termination provisions set forth in Section 15.3
hereto.
5.4 APPROVAL OF EXECUTABLE SOFTWARE. Publisher shall, on or before the
date specified in the Product Proposal or as determined by SCEA pursuant to the
Review Process, deliver to SCEA for its inspection and evaluation, a final
version of the Executable Software for the proposed Licensed Product. SCEA will
evaluate such final version
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of the Executable Software and notify Publisher in writing of its approval or
disapproval of such Executable Software, 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/or improvements are necessary. After making the necessary corrections
and/or improvements, Publisher may submit a new version of such Executable
Software for approval or disapproval by SCEA. No approval by SCEA or any
element of the Executable Software shall be deemed an approval of any other
element of the Licensed Product, nor shall any such approval be deemed to
constitute a waiver of any of SCEA's rights under this Agreement. SCEA shall
have the right to disapprove Executable Software if it fails to comply with one
or more conditions as set forth in the SourceBook with no obligation to review
all elements of such 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 gold master copies as SCEA may require from time
to time. Publisher warrants that all final versions of Executable Software are
fully tested and shall use its best efforts to ensure that final versions of
Executable Software are fully debugged prior to submission to SCEA. In
addition, prior to manufacture of Executable Software, Publisher shall be
required to sign an affidavit (in the form of attached Exhibit B) stating that
the Executable Software complies or will comply with standards set forth in the
SourceBook or other documentation provided by SCEA to Publisher, Publisher
approves the release of such Executable Software for manufacture in its current
form and Publisher shall be fully responsible for any problems related to such
Executable Software.
5.5 PUBLISHER'S ADDITIONAL QUALITY ASSURANCE OBLIGATIONS. If at any
time or times subsequent to the approval of the Executable Software pursuant to
Section 5.4, SCEA identifies any material bugs (such materiality to be
determined by SCEA in its sole discretion) with respect to the Licensed Product
or any material bugs are brought to the attention of SCEA or in the event that
SCEA identifies any improper use its Licensed Trademarks or other Sony
Materials with respect to the Licensed Product or any such improper use is
brought to the attention of SCEA, Publisher shall, at no cost to SCEA, promptly
correct any such material bugs, or improper Licensed Trademark or Sony Material
use, 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 any of the Licensed Products create any
reasonable 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 Licensed Product 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.
5.6 APPROVAL OF PRINTED MATERIALS. For each proposed Licensed Product,
Publisher shall be responsible, at Publisher's expense, for creating and
developing all 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 any
such 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 in writing by SCEA pursuant to a
legal requirement involving SCEA's Intellectual Property Rights. Failure to
follow the Guidelines and/or to submit or resubmit Printed Materials to SCEA as
set forth herein, and in Section 7.1.3.1 hereto shall be a material breach of
this Agreement and the provisions of Section 15.3 shall apply. No later than the
time final Executable Software for a proposed Licensed Product is submitted to
SCEA for inspection and evaluation, Publisher shall also deliver to SCEA, for
review and evaluation, the proposed final Printed Materials for such proposed
Licensed Product and a form of limited warranty for the proposed Licensed
Product. Publisher acknowledges that failure to meet any scheduled release dates
for a Licensed Product are solely the risk and responsibility of Publisher, and
SCEA assumes no responsibility for Publisher failing to meet such scheduled
release dates due to disapproval of Printed Materials relating to such Licensed
Product. Publisher agrees that the quality of such Printed Materials shall be of
the same quality of that associated with other commercially available high
quality consumer 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 committed to by Publisher for production of Packaging or Printed
Materials that is disapproved by SCEA. After making the necessary corrections to
the disapproved Printed Materials, Publisher must submit new proposed Printed
Materials for approval by SCEA. SCEA shall not unreasonably withhold or delay
its review of the proposed Printed Materials. No approval by SCEA of any element
of the Printed Materials shall be deemed an approval of any other element of the
Licensed Product, nor shall any such approval by deemed to constitute a waiver
of any of SCEA's rights under this Agreement. In addition, SCEA's approval of
any element of Printed Materials shall not release Publisher from any of its
representations and warranties in Section 10.2 hereunder.
5.7 APPROVAL OF ADVERTISING MATERIALS. Pre-production samples of all
Advertising Materials relating to Licensed Products shall be submitted by
Publisher to SCEA, free of cost, for SCEA's evaluation and approval, which
shall not be unreasonably withheld or delayed, as to the quality, style,
appearance and usage of any of the Licensed Trademarks, appropriate references
of any
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7
required notices and compliance with the Guidelines, prior to any actual
production, use or distribution of any such items by Publisher or on its
behalf. No such proposed Advertising Materials shall be produced, used or
distributed directly or indirectly by Publisher without first obtaining the
written approval of SCEA. 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 which 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 affidavit (in the form of attached
Exhibit C) stating that all advertising and promotional materials for the
Licensed Product complies or will comply with the Guidelines for use of the
Licensed Trademarks. After making the necessary corrections to the disapproved
Advertising Materials, Publisher must submit new proposed Advertising Materials
for approval by SCEA. SCEA shall not unreasonably withhold or delay its review
of the proposed Advertising Materials. Failure to follow the Guidelines and/or
to submit or resubmit Advertising Materials to SCEA for review shall be a
material breach of this Agreement. PUBLISHERS WHO FAIL TO SUBMIT ADVERTISING
MATERIALS TO SCEA FOR REVIEW OR OTHERWISE BROADCAST OR PUBLISH ADVERTISING
MATERIALS WITHOUT THE APPROVAL OF SCEA SHALL BE SUBJECT TO THE PROVISIONS OF
THE "THREE STRIKES" PROGRAM AS OUTLINED IN THE SOURCEBOOK WHICH COULD RESULT IN
TERMINATION OF THIS LPA; TERMINATION OF THE LICENSED PRODUCT; OR COULD SUBJECT
PUBLISHER TO THE PROVISIONS OF SECTION 15.4 HERETO. Subject in each instance to
the prior written approval of SCEA (not to be unreasonably withheld), Publisher
may use such textual and/or pictorial advertising matter (if any) as may be
created by SCEA or in its behalf pertaining to the Sony Materials and/or to the
Licensed Trademarks on such promotional and advertising materials as may, in
Publisher's judgment, promote the sale of the Licensed Products within the
Licensed Territory. Publisher shall include, at Publisher's cost and expense,
the required consumer advisory rating code(s) on any and all Advertising
Materials used in connection with the Licensed Product, which shall be procured
in accordance with the provisions of Section 6 below. Publisher acknowledges
that 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. No approval by SCEA of
any element of the Advertising Materials shall be deemed an approval of any
other element of the 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 of Advertising Materials shall not release
Publisher from any of its representations and warranties in Section 10.2
hereunder.
6. LABELING REQUIREMENTS.
All Printed Materials for each Unit of the Licensed Products shall have
conspicuously, legibly and irremovably affixed thereto the notices specified in
a template provided in the SourceBook or other documentation provided by SCEA
to Publisher, which template may be amended from time to time by SCEA during
the term of this Agreement, following which Publisher will incorporate such
amendment into its next print run for the Licensed Products. Publisher agrees
that, if required by SCEA or any governmental entity, it 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 in accordance with the SourceBook or other documentation provided by
SCEA to Publisher, at Publisher's cost and expense.
7. MANUFACTURE OF THE LICENSED PRODUCTS.
7.1 MANUFACTURE BY SCEA.
7.1.1 APPOINTMENT OF SCEA AS MANUFACTURER. Publisher hereby appoints
SCEA, and SCEA hereby accepts such appointment, as the manufacturer of
PlayStation Discs and, subject to Section 7.1.3 below, the manufacturer and
assembler of such PlayStation Discs with Printed Materials and Packaging.
Publisher acknowledges and agrees that it shall purchase from SCEA or a
Designated Manufacturing Facility [*] of its requirements for PlayStation
Discs, during the term of the Agreement. SCEA shall provide to Publisher
written Manufacturing Specifications, which may be amended from time to time
upon reasonable notice to Publisher. SCEA shall have the right, but no
obligation, to contract or subcontract any phase of production or manufacture
of any or all of the Licensed Products, the Packaging, the Printed Materials or
any part thereof, subject to Section 14 below. Any Designated Manufacturing
Facility shall be a third party beneficiary of this Agreement.
7.1.2 CREATION OF MASTER CD-ROM. Following approval by SCEA of each
Licensed Product pursuant to Section 5.4, Publisher shall provide SCEA with the
number of Master Discs specified in the SourceBook or in any other
documentation separately provided by SCEA to Publisher. SCEA or a Designated
Manufacturing Facility shall create from one of the Master Discs provided by
Publisher the original master CD-ROM, from which all other copies of the
Licensed Product are to be replicated. Publisher shall be responsible for the
costs, as set forth in the Manufacturing Specifications, of creating such
original master CD-ROM. In order to insure against loss or damage to the copies
of the Executable Software furnished to SCEA, Publisher will retain duplicates
of all such Master
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* Confidential portion omitted and filed separately with the Commission.
8
Discs. Neither SCEA nor a Designated Manufacturing Facility shall be liable for
loss of or damage to any copies of the Master Discs or Executable Software.
7.1.3 PRINTED MATERIALS, PACKING AND ASSEMBLY SERVICES.
7.1.3.1 PRINTED MATERIALS. If Publisher elects to obtain Printed
Materials from SCEA, Publisher shall deliver the film for all SCEA approved
Printed Materials to SCEA or, if appropriate, at SCEA's option, to a Designated
Manufacturing Facility in accordance with the Manufacturing Specifications, at
Publisher's sole risk and expense. Publisher may elect, subject to SCEA's
approval as provided in Section 5.6 hereto and in this section, to be
responsible for manufacturing its own Printed Materials. In the event that
Publisher elects to be responsible for manufacturing the Printed Materials
(other than any Artwork which may be placed directly upon the PlayStation Disc,
which will be supplied to SCEA for placement on the PlayStation Disc),
Publisher shall deliver one hundred and ten percent (110%) of the number of
Units of such Printed Materials to SCEA or at SCEA's option to a Designated
Manufacturing Facility, within the time frame specified in the Manufacturing
Specifications, in the minimum order quantities set forth in Section 7.2.2
below, at Publisher's sole risk and expense. Publisher shall be required to
supply SCEA with twenty-four (24) samples of any Printed Materials not produced
or supplied by SCEA or a Designated Manufacturing Facility prior to production,
at no charge to SCEA or such Designated Manufacturing Facility, for SCEA's
approval with respect to the quality thereof. Twelve (12) copies of such sample
Printed Materials shall be supplied to SCEA and twelve (12) copies shall be
supplied to a Designated Manufacturing Facility. In the event that such Printed
Materials for a Licensed Product are revised by Publisher prior to a reorder of
Units of Licensed Products, then Publisher must submit an additional
twenty-four (24) samples to SCEA and a Designated Manufacturing Facility for
approval prior to production. Such Printed Materials shall be required to
comply with any Manufacturing Specifications established by SCEA for Printed
Materials for Licensed Products, and SCEA shall have the right to disapprove
any Printed Materials that do not comply with such Manufacturing
Specifications. Such Manufacturing Specifications for Printed Materials shall
be comparable to the manufacturing specifications applied by SCEA to its own
software products for the Player. If Publisher elects to supply its own Printed
Materials, neither SCEA nor a Designated Manufacturing Facility shall bear any
responsibility for any delays.
7.1.3.2 PACKAGING. Publisher may either obtain Packaging from SCEA or
from an alternate source. If Publisher elects to be responsible for
manufacturing its own Packaging (other than any edge labels or other proprietary
labels and any portion of the jewel case containing Licensed Trademarks, which
Publisher will be required to purchase from SCEA or 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 edge labels provided by SCEA or 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
reasonable specified by SCEA. Publisher shall be required to supply SCEA with
twenty-four (24) samples of any Packaging not produced or supplied by SCEA or a
Designated Manufacturing Facility, at no charge to SCEA or Designated
Manufacturing Facility, prior to production for SCEA's approval with respect to
the quality thereof. Twelve (12) copies of such sample Packaging shall be
supplied to SCEA and twelve (12) copies shall be supplied to a Designated
Manufacturing Facility. In the event that Packaging for any Licensed Product is
changed in any way after SCEA and a Designated Manufacturing Facility have
already approved such Packaging, then Publisher must resubmit an additional
twenty-four (24) samples to SCEA and such Designated Manufacturing Facility for
approval. Failure to submit or resubmit Packaging to SCEA and a Designated
Manufacturing Facility shall constitute a material breach of this Agreement, and
the provisions of Section 15.3 shall apply. Such Packaging shall be required to
comply with any Manufacturing Specifications established by SCEA for Packaging
for Licensed Products, and SCEA shall have the right to disapprove any Packaging
that does not comply with such Manufacturing Specifications. Such Manufacturing
Specifications for Packaging shall be comparable to the manufacturing
specifications applied by SCEA to its own software products for the Player. If
Publisher procures Packaging from an alternate source, then it must also procure
assembly services from an alternate source; neither SCEA nor a Designated
Manufacturing Facility shall be required to assemble such Licensed Product if
Packaging is obtained from an alternate source. If Publisher elects to supply
its own Packaging and assembly services, neither SCEA nor a Designated
Manufacturing Facility shall bear any responsibility for any delays.
7.1.3.3 ASSEMBLY SERVICES. Publisher may either procure assembly
services from SCEA or from an alternate source. If Publisher elects to be
responsible for assembling the Licensed Products, then SCEA shall ship the
component parts of the Licensed Product to a destination provided by Publisher,
at Publisher's sole risk and expense. Assembly of Licensed Products shall be
required to comply with any Manufacturing Specifications established by SCEA
for such assembly services, and 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
the Manufacturing Specifications. SCEA shall have the right to 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 assemble its own Licensed
Products, neither SCEA nor a Designated Manufacturing Facility shall bear any
responsibility for any delays or missing component parts. Failure to comply
with Manufacturing Specifications regarding assembly services shall constitute
a material
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9
breach of this Agreement, and the provisions of Section 15.3 shall apply.
7.1.4 MANUFACTURE OF UNITS. Upon approval, pursuant to Section 5 and
subject to Section 7.1.3, of such pre-production samples of the Executable
Software and the associated Printed Materials, Packaging and assembly services,
SCEA or a Designated Manufacturing Facility will, in accordance with the terms
and conditions set forth in this Section 7, and at Publisher's expense (a)
manufacture PlayStation Discs for Publisher; (b) manufacture Publisher's
Packaging and/or Printed Materials; and/or (c) assemble the PlayStation Discs
with the Printed Materials and the Packaging.
7.2 PRICE, PAYMENT AND TERMS.
7.2.1 PRICE. The applicable price for manufacture of any Units of the
Licensed Products ordered hereunder shall be provided to Publisher in the
Manufacturing Specifications prior to manufacture of the Licensed Products.
Purchase price(s) shall be stated in United States dollars and are subject to
change by SCEA at any time upon reasonable notice to Publisher; provided,
however, that the applicable price shall not be changed with respect to any
Units of Licensed Products which are the subject of an effective Purchase Order
but which have not yet been delivered by SCEA to Publisher at the designated
F.O.B. point. Prices for finished Units of Licensed Products are exclusive of
any foreign or U.S. federal, state, or local sales or value-added tax, use,
excise, customs duties or other similar taxes or duties, which SCEA may be
required to collect or pay as a consequence of the sale or delivery of any Units
of the Licensed Products to Publisher. Publisher shall be solely responsible for
the payment or reimbursement of any such taxes, fees and other such charges or
assessments applicable to the sale and/or purchase of any finished Units of any
of the Licensed Products.
7.2.2 ORDERS. Publisher shall issue to SCEA written Purchase Order(s)
in accordance with the Manufacturing Specifications. All Purchase Orders to SCEA
shall reference this Agreement, give a Publisher authorization number, specify
quantities by Licensed Products, state requested delivery date and all packaging
information and be submitted on or with an order form to be provided in the
Manufacturing Specifications. All Purchase Orders to SCEA shall be subject to
acceptance by SCEA which shall not be unreasonably withheld or delayed. Purchase
Orders issued by Publisher to SCEA for each of the Licensed Products approved by
SCEA shall be non-cancelable and be for at least [*] Units of such Licensed
Product. In the event that SCEA or a Designated Manufacturing Facility
manufactures the Printed Materials for the Publisher pursuant to Section 7.1.3
above, Publisher may, at Publisher's option, allow SCEA or such Designated
Manufacturing Facility to manufacture an additional 20% of such Printed
Materials at Publisher's expense on anticipation of reorders. Publisher agrees
that such Printed Materials will be stored by a Designated Manufacturing
Facility for a period of no more than one hundred and eighty (180) days, after
which time such Printed Materials will, at Publisher's option, either be
returned to Publisher at Publisher's cost and expense or be destroyed. Such
Designated Manufacturing Facility may also store a reasonably quantity of
Printed Materials procured from an alternate source for up to one hundred and
eighty (180) days, subject to a reasonable storage fee, after which time such
Printed Materials will, at Publisher's option, either be returned to Publisher
at Publisher's cost and expense or be destroyed. Publisher shall have no right
to cancel or reschedule any Purchase Order (or any portion thereof) for any of
the Licensed Products unless the parties shall first have determined the status
of such Purchase Order in the manufacturing process and reached mutual agreement
as to Publisher's financial liability with respect to any desired cancellation
or rescheduling of any such Purchase Order (or any portion thereof).
7.2.3 PAYMENT TERMS. Purchase Orders will be invoiced on a pro forma
basis (a pro forma invoice is issued in advance of the official invoice) as soon
as reasonably practical after receipt of Purchase Order and will include both
manufacturing price and royalties payable pursuant to Section 9 hereto for each
Unit of Licensed Products ordered. Each invoice will be payable either on a
cash-in-advance basis or pursuant to a letter of credit. If the cash in advance
option is selected, then upon issuance of a pro forma invoice to Publisher by
SCEA, Publisher shall immediately forward to a Designated Manufacturing Facility
the invoice amount. Such amount shall be payable in United States dollars and
remitted by wire transfer to such bank account as shall be designated by SCEA or
a Designated Manufacturing Facility for such purpose. Upon receipt of such
amount by a Designated Manufacturing Facility, SCEA shall release the
Publisher's Purchase Order to a Designated Manufacturing Facility for
production. If the letter of credit option is selected, then at the time a
Purchase Order is placed with SCEA, Publisher shall provide to SCEA an
irrevocable letter of credit in favor of SCEA and payable at sight. The letter
of credit must either be issued by a bank acceptable to SCEA or confirmed, at
Publisher's expense, if so requested by SCEA. The letter of credit shall be in
United States dollars in an amount equal to the manufacturing price determined
pursuant to Section 7.2.1 and the royalty determined pursuant to Section 9 for
each Unit of the License Product ordered. All associated banking charges with
respect to payments of manufacturing costs and royalties (including but not
limited to the costs of obtaining a letter of credit) shall be borne solely by
Publisher. If permitted by SCEA, SCEA may at its sole discretion extend credit
terms and limits to Publisher. SCEA may also at any time revoke such credit
terms and limits as extended. If Publisher qualifies for such credit terms, then
orders will be invoiced upon shipment and each invoice will be paid within
[*] days of the date of the invoice. All overdue sums owed nor otherwise
payable to SCEA under this Section 7 and under Section 9 hereto shall bear
interest at the rate of one and one-half (1-1/2%) percent per month, or such
lower rate as may be the maximum rate permitted under applicable law,
* Confidential portion omitted and filed separately with the Commission.
-9-
10
from the date upon which payment of the same shall first become due up to and
including the date of payment thereof whether before or after judgment.
Publisher shall be additionally liable for all of SCEA's costs and expenses of
collection, including, without limitation, reasonable fees for attorneys and
court costs. No deduction may be made from remittances unless an approved
credit memo has been issued by SCEA. No claim for credit due to shortage or
breakage will be allowed unless it is made within seven (7) days after
Publisher receives the Licensed Product, and SCEA assumes no responsibility for
shortage or breakage if Packaging and assembly services are obtained from
alternate sources. Each shipment of Licensed Products to Publisher shall
constitute a separate sale to Publisher, whether said shipment be whole or
partial fulfillment of any order. Notwithstanding the foregoing, nothing in
this Section shall excuse or be construed as a waiver of Publisher's obligation
to timely provide any and all payments owed to SCEA hereunder.
7.3 DELIVERY OF LICENSED PRODUCTS. Neither SCEA nor any Designated
Manufacturing Facility shall have an obligation to store completed Units of
Licensed Products. Delivery of Licensed Products shall be in accordance with
the Manufacturing Specifications, provided that Publisher may either specify
the carrier to be used or allow SCEA or a Designated Manufacturing Facility to
use the best way of getting the Licensed Products delivered. Title, risk of
loss or damage in transit to any and all Licensed Products or component parts
thereof manufactured by SCEA pursuant to Publisher's Purchase Orders shall vest
in Publisher immediately upon delivery to the carrier.
7.4 TECHNOLOGY EXCHANGE AND QUALITY ASSURANCE. There will be no technology
exchange between SCEA or any Designated Manufacturing Facility and Publisher
under this Agreement. Due to the proprietary nature of the mastering process,
SCEA or a Designated Manufacturing Facility will not under any circumstances
release any original master CD-ROM, Master Discs or other in-process materials
to the Publisher. All such physical master discs, stampers, etc. shall be and
remain the sole property of SCEA or a Designated Manufacturing Facility. SCEA
recognizes that the Intellectual Property Rights contained in Licensed Developer
Software (separate and apart from any Sony Materials licensed to Publisher by
SCEA hereunder) which is contained in physical master discs, stampers and other
in-process materials is, as between SCEA and Publisher, the sole and exclusive
property of Publisher or its licensors.
8. MARKETING AND DISTRIBUTION.
8.1 MARKETING GENERALLY. In accordance with the provisions of this
Agreement, at no expense to SCEA, Publisher shall, and shall direct its
distributors to, diligently market, sell and distribute the Licensed Products,
and shall use its commercially reasonable best 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. Such methods of protection may include,
without limitation, markings or insignia providing identification of
authenticity and packaging seals.
8.2 SAMPLES. Subject to availability, Publisher shall sell to SCEA
quantities of the Licensed Products at as low a price and on terms as favorable
as Publisher sells similar quantities of the Licensed Products to the general
trade. In addition, Publisher shall provide to SCEA at no additional cost, for
SCEA's internal use and general marketing purposes, sample copies of each
Licensed Product, which shall not exceed [*] Units of each Licensed Product.
Publisher shall be obligated to pay the manufacturing costs to the Designated
Manufacturing Facility in accordance with Section 7.2.1, but not the royalty
charges in accordance with Section 9, in connection with such sample Units of
Licensed Products. 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 Units of the Licensed Products without
Publisher's prior written consent.
8.3 MARKETING PROGRAMS OF SCEA. From time to time, SCEA may invite
Publisher to participate in promotional or advertising opportunities which may
feature one or more Licensed Products from one or more 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
11.2 hereunder and delivery to SCEA shall constitute acceptance by Publisher of
the terms of the offer. Moreover, all materials, if featured with one or more
software products of SCEA or Licensed Products of other Publishers, may be used
by SCEA, unless otherwise agreed in writing, with the following generic Legal
Copy line: "Game copyright and trademarks are the property of the respective
publisher or their licensors" ("Generic Line").
8.4 DEMONSTRATION DISC PROGRAMS. SCEA may, from time to time, provide
opportunities for Publisher to participate in SCEA Demo Disc programs by
providing Product Information to SCEA. 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 or in
other documentation to be provided by SCEA to Publisher when published. Except
as otherwise specifically set forth herein, in the SourceBook or in other
documentation provided by SCEA to Publisher, Third Party Demo Discs shall be
considered "Licensed Products" and shall be subject in all respects to the
terms and conditions of this Agreement. In addition, the following procedures
shall also apply to SCEA Demo Discs and Third Party Demo Discs:
* Confidential portion omitted and filed separately with the Commission.
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11
8.4.1 SCEA DEMO DISCS.
8.4.1.1 LICENSE. If Publisher wishes 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
advertisements and promotional materials (including but not limited to in-store
displays) and to make, copy, and distribute in packaging, advertising and
promotional materials, copies of screen displays generated by the code,
representative video samples or other Product Information provided to SCEA for
use in such SCEA Demo Disc. Publisher agrees that all decisions relating to the
selection of first and third party Product Information, marketing,
advertisement, promotion, distribution or sale of the SCEA Demo Discs as a
whole, including but not limited to SCEA Demo Discs title, trade name, logo
and/or other identification, sales presentation, or retail and wholesale
prices, shall be in the sole discretion of SCEA.
8.4.1.2 SUBMISSION AND APPROVAL OF PRODUCT INFORMATION. Upon
receipt of a letter or other correspondence, the form of which is attached
hereto as Exhibit D, notifying Publisher 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 no later than the
deadline set forth in such letter or other correspondence. A separate letter
will be sent for each SCEA Demo Disc, and Publisher must sign each letter prior
to inclusion in such SCEA Demo Disc. Any Product Information provided by
Publisher shall include Legal Copy on the title screen or elsewhere in the
Product Information submitted to SCEA. The only Legal Copy provided by SCEA
shall be the Generic Line as provided in Section 8.3 above, which shall appear
on the SCEA Demo Disc title screen and packaging. Publisher acknowledges that
SCEA shall have no responsibility to provide any Legal Copy beyond the Generic
Line. Such Product Information shall comply with technical specifications
provided to Publisher by SCEA. SCEA reserves the right to review and test the
Product Information provided and request revisions prior to inclusion on the
SCEA Demo Disc. In the event that 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 in accordance with such deadline shall
result in the Product Information being removed from consideration for the SCEA
Demo Disc. Costs associated with preparation of Product Information for
inclusion in the SCEA Demo Disc shall be borne by Publisher. Except as
otherwise provided in this Section, SCEA shall not edit or modify Product
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 creation or development of any SCEA Demo Disc.
8.4.1.3 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. 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 will not guarantee to Publisher Licensed Product prominence with
regards to screen shots or title treatment on the packaging or in SCEA Demo
Discs. 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.
8.4.1.4 RETAIL SAMPLER DISCS. Publisher is aware and
acknowledges that the Retail Sampler Disc will be distributed and sold by SCEA
in the retail market. If Publisher elects to participate in any Retail Sampler
Disc program, Publisher acknowledges that it is aware of no limitations
regarding any Licensed Product or any portion thereof provided to SCEA pursuant
to the terms of this Agreement which would in any way restrict SCEA's ability
to distribute or sell the Retail Sampler Disc at retail, nor does Publisher or
its licensors 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 for such SCEA Demo Disc.
8.4.2 THIRD PARTY DEMO DISCS.
8.4.2.1 LICENSE. If Publisher wishes to participate in a Third
Party Demo Disc program by notifying SCEA of its intention thereto, 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
accordance with the specifications provided separately to Publisher by SCEA,
which may be modified from time to time by SCEA. In addition, SCEA hereby
consents to the use of the Licensed Trademarks in connection with Third party
Demo Discs, provided that SCEA's approval must be obtained prior to any use in
accordance with the Terms of Section 8.4.2.2 hereto. 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, the right to produce Third Party Demo Discs under
such SCEA Established Third Party Demo Disc Program shall thereupon be revoked,
and SCEA shall have the right to terminate any
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related Third Party Demo Discs in accordance with the terms of Section 15.3
hereto.
8.4.2.2 SUBMISSION AND 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 technical specifications and any other requirements provided to
Publisher by SCEA in the SourceBook 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 5.6,
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 5.7. Costs
associated with preparation of product code for inclusion on Third Party Demo
Discs shall be borne by Publisher. With respect to the Trade Promotional Disc
Program, Publisher acknowledges that Product Information provided in connection
with such program is in beta form and is not final approved code, nor should
Publisher assume that final approval for mass production has been given at the
time of manufacture. Publisher agrees to use the generic packaging and printed
materials pursuant to the Trade Promotional Disc Program and the Consumer
Promotional Disc Program to clearly and conspicuously state that the Trade
Promotional Disc Program and the Consumer Promotional Disc Program are for
promotional purposes only and not for resale.
8.4.2.3 MANUFACTURE AND ROYALTY OF THIRD PARTY DEMO DISCS. Publisher
shall comply with any Manufacturing Specifications provided separately by SCEA
to Publisher with respect to the manufacture and payment for the costs of
manufacture of Third Party Demo Discs, and Publisher shall also comply with all
terms and conditions of Section 7 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 Exhibit A.
8.5 CONTESTS AND SWEEPSTAKES OF PUBLISHER. SCEA acknowledges that, from
time to time, Publisher may conduct contests and sweepstakes to promote Licensed
Products. SCEA agrees to permit Publisher to include contests and sweepstakes
materials in Printed Materials and Advertising Materials, subject to compliance
with the approval provisions of Section 5.6 and 5.7 hereunder, compliance with
the provisions of Section 10.2 and 11.2 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 warrants that it has the expertise to conduct such contests or sweepstakes,
and in any event, Publisher assumes full responsibility for such contest or
sweepstakes; (ii) Publisher represents and warrants that it has obtained the
consent of all holders of intellectual property rights required to be obtained
in connection with the contest or sweepstakes including, but not limited to, the
consent of any holder of copyrights or trademarks relating to any advertisement
or any promotional materials publicizing the contest or sweepstakes, or the
prizes being awarded to winners of the contest or sweepstakes; and (iii)
Publisher shall make available to SCEA all contest and sweepstakes material
prior to publication in accordance with the approval process set forth in
Section 5.6 or 5.7. Approval by SCEA of contest or sweepstakes materials for use
in the Printed Materials or Advertising Materials (or any use of the Player 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.
8.6 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 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 any Units of such Licensed
Product.
8.7 LIMITATIONS ON DISTRIBUTION. Notwithstanding any other provisions in
this Agreement, Publisher shall not, directly or indirectly, solicit orders
from and/or sell any Units of the Licensed Products to any person or entity
outside of the Licensed Territory, and Publisher further agrees that it shall
not directly or indirectly solicit orders for and/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.
9. ROYALTIES.
Publisher shall pay SCEA a per Unit royalty in United States dollars, as set
forth on Exhibit A hereto, for each Unit of the Licensed Products manufactured.
Payment of such royalties shall be made to SCEA in conjunction with the payment
to SCEA's Designated Manufacturing Facility of the manufacturing costs for each
Unit and pursuant to the payment terms of Section 7.2.3 hereto. 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
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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
and/or distribution of any Units of the Licensed Products and/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 and/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 prior
consent 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 and/or assessments have in fact
been paid.
10. REPRESENTATIONS AND WARRANTIES.
10.1 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.
10.2 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 Licensed Developer
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 other right
or interest of any kind whatsoever of any third party, or otherwise contesting
any right, title or interest of Publisher in or to the Licensed Developer
Software or any underlying work or content embodied therein, or any name,
designation or trademark used in conjunction with the Licensed Products;
(ii) The Licensed Developer Software, Product Proposals, Product
Information, Printed Materials and Advertising Materials and their contemplated
use under this Agreement does 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;
(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 provided to
SCEA 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 Licensed Products have been developed, marketed, sold and/or
distributed under license from SCEA);
(viii) The Executable Software shall be distributed by Publisher solely
in object code form;
(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, such that use of the software or Player would
be disrupted, delayed, destroyed or rendered less than fully useful, and shall
be fully compatible with the Player 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 marketing,
sale, and/or distribution of the Licensed Products shall in no manner reflect
adversely upon the name, reputation or goodwill of SCEA; and
(xii) Publisher shall make no false, misleading or inconsistent
representations or claims with respect to any Licensed Products, the Player or
SCEA.
11. INDEMNITIES; LIMITED LIABILITY.
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11.1 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/or
settlement thereof, subject to the right of Publisher to participate in any
such action or proceeding at its own expense with counsel of its own choosing.
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
agrees to 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 such claim, action or proceeding without SCEA's prior written
consent.
11.2 INDEMNIFICATION BY PUBLISHER. Publisher shall indemnify and hold
SCEA 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 (i) a breach of any of the
representations or warranties provided by Publisher herein, including without
limitation claims resulting from Publisher's failure to timely pay any
withholding taxes or other assessments as set forth in Section 9 hereto, any
breach of Publisher's confidentiality obligations as set forth in Section 14
hereto or any breach of any representations, warranties or covenants relating
to contests or sweepstakes as set forth in Sections 8.5 and 10.2 hereto; or
(ii) any claim of infringement or alleged infringement of any third party's
Intellectual Property Rights with respect to the Licensed Developer Software or
any Product Information of Publisher; or (iii) any claims of or in connection
with any personal or bodily injury (including death) or property damage, by
whomsoever such claim is made, arising out of, in whole or in part, the
marketing, sale, distribution and/or use of any of the Licensed Products
(including but not limited to any damages or personal injury resulting from the
awarding or failure to award contest or sweepstakes prizes), 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 marketing,
sale and/or distribution of Licensed Products; provided, however, that SCEA
shall give prompt written notice to Publisher of the assertion of any such
claim, and provided, further, that Publisher shall have the right to select
counsel and control the defense and/or settlement thereof, subject to the right
of SCEA to participate in any such action or proceeding at its own expense with
counsel of its own choosing. Publisher shall have the exclusive right, at its
discretion, to commence and/or prosecute at its own expense any lawsuit or to
take such other action with respect to such matter as shall be deemed
appropriate by 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 without Publisher's
prior written consent.
11.3 LIMITATION OF LIABILITY.
11.3.1 LIMITATION OF SCEA'S LIABILITY. IN NO EVENT SHALL SCEA OR
ITS AFFILIATES OR OTHER COMPANIES AFFILIATED WITH SCEA AND ITS AFFILIATES,
SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE FOR PROSPECTIVE
PROFITS, OR ANY SPECIAL, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
OUT OF 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 PLAYER BY
PUBLISHER OR ANY END-USER, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING
NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR OTHERWISE. IT IS THE
RESPONSIBILITY OF PUBLISHER TO REVIEW THE ACCURACY OF THE DATA ON THE UNITS
MANUFACTURED BY SCEA FOR PUBLISHER. 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 SECTION 11.1 AND ANY WARRANTY IN SECTION 11.4 HERETO, EXCEED THE TOTAL
AMOUNT PAID BY PUBLISHER 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 PUBLISHER OR TO ANY THIRD PARTIES
WITH RESPECT TO THE QUALITY, OPERATION AND/OR PERFORMANCE OF ANY PORTION OF THE
SONY MATERIALS, THE PLAYER OR ANY LICENSED PRODUCT.
11.3.2 LIMITATION OF PUBLISHER'S LIABILITY. IN NO EVENT SHALL
PUBLISHER OR COMPANIES AFFILIATED WITH PUBLISHER, SUPPLIERS, OFFICERS,
DIRECTORS, EMPLOYEES
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OR AGENTS BE LIABLE to SCEA FOR ANY PROSPECTIVE PROFITS, OR SPECIAL, PUNITIVE,
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH
(i) THIS AGREEMENT OR (ii) THE USE OR DISTRIBUTION IN ACCORDANCE WITH THE TERMS
AND CONDITIONS OF THIS AGREEMENT OR ANY CODE PROVIDED BY SCEA, IN WHOLE OR IN
PART, OR ANY LICENSED DEVELOPER SOFTWARE BY PUBLISHER OR ANY THIRD PARTY,
WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), INDEMNITY,
PRODUCT LIABILITY OR OTHERWISE, PROVIDED THAT PUBLISHER EXPRESSLY AGREES
THAT SUCH LIMITATIONS SHALL NOT APPLY TO DAMAGES RESULTING FROM PUBLISHER'S
BREACH OF SECTIONS 2, 4, 11.2, 12.2 OR 14 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 11.2 OR 17.9.
11.4 WARRANTIES; DISCLAIMER OF WARRANTIES.
11.4.1 MANUFACTURING WARRANTY. SCEA warrants that the Units or any
component parts thereto that are manufactured by SCEA or a Designated
Manufacturing Facility for Publisher shall, at time of delivery to Publisher, be
[*]. The sole obligation of SCEA and a Designated Manufacturing Facility under
this warranty shall be, for a period of [*] the date of shipment of Units of
Licensed Products or component parts thereto to Publisher, at SCEA's election,
either to replace the defective Units or component parts or to issue credit to
Publisher for the purchase price and any royalties paid to SCEA and/or a
Designated Manufacturing Facility for any such [*]. Such warranty is the only
warranty applicable to the Licensed Product manufactured by a Designated
Manufacturing Facility for Publisher pursuant to Section 7 of this Agreement.
This warranty shall not apply to damage resulting from accident, alteration,
negligence, normal wear and tear, willful damage, abnormal conditions of use,
failure to follow directions for use (whether given in instruction manuals or
otherwise) or misuse of the Licensed Products, or to damage to or defects in any
materials provided by Publisher to SCEA or a Designated Manufacturing Facility.
If, during the aforesaid period, a [*] is received by Publisher, Publisher shall
notify SCEA within the warranty period set forth above and, upon request by
SCEA, provide SCEA with the returned Unit(s) or component part(s) and a written
description of the [*]. SCEA and any Designated Manufacturing Facility shall not
accept the return of any Unit(s) or component part(s) except [*] (i.e., those
Units or component parts that are [*], and all such returns must be authorized
by SCEA in writing and in advance. All Units or component parts which are
returned in accordance with this Section 11.4.1 will be sent to a place
designated by SCEA at SCEA's expense. If the defect did not arise from causes
placing liability on SCEA or a Designated Manufacturing Facility under the above
warranty, Publisher shall reimburse SCEA and any Designated Manufacturing
Facility for expenses incurred in shipping, processing and analyzing the Units
or component parts. SCEA's and any Designated Manufacturing Facility's
reasonable judgment as to the origin of the defect shall be final and binding.
Notwithstanding the foregoing, nothing herein shall be construed by Publisher to
extend or create any stated limited warranty to consumers beyond the terms of
such warranty. NOTWITHSTANDING THE FOREGOING, ANY COMPONENT PARTS OF LICENSED
PRODUCTS NOT MANUFACTURED BY SCEA OR A DESIGNATED MANUFACTURING FACILITY ARE NOT
UNDER WARRANTY HEREUNDER.
11.4.2 DISCLAIMER OF WARRANTY. EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH ABOVE, NEITHER SCEA NOR ANY DESIGNATED MANUFACTURING FACILITY NOR ITS
AFFILIATES AND SUPPLIERS MAKE, NOR DOES PUBLISHER RECEIVE, ANY WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY REGARDING THE SONY MATERIALS, THE PLAYER, 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 OR CONSEQUENTIAL, ARISING OUT OF THE USE OR
INABILITY TO USE THE 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, LICENSED PRODUCTS, SCEA DEMO DISCS
AND THE PLAYER. 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.
12. COPYRIGHT, TRADEMARK AND TRADE SECRET RIGHTS.
12.1 PUBLISHER RIGHTS. The Licensed Developer Software and all Product
Information, Product Proposals, Printed Materials and Advertising Materials
related thereto (exclusive of the rights licensed from SCEA hereunder) and the
Intellectual Property Rights therein and any names or other designations used
as titles for the Licensed Products and any other trademarks used by Publisher
and/or its affiliates are and shall be exclusive property of Publisher or of
any third party from which Publisher has
* Confidential portions omitted and filed separately with the Commission.
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been granted, or to whom Publisher has granted, the license and related rights
to develop and otherwise exploit any such Licensed Developer Software and
related materials or any such names or other designations. SCEA shall not do
or cause to be done any act or thing in any way impairing or tending to impair
or dilute any of Publisher's rights, title and/or interests in or to
Publisher's Intellectual Property Rights.
12.2 SCEA RIGHTS.
12.2.1 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, other than the non-exclusive
license and privilege during the term hereof to display and use the Licensed
Trademarks solely in accordance with the provisions of this Agreement.
Publisher shall not do or cause to be done any act or thing in any way
impairing or tending to impair or dilute any of SCEA's rights, title and/or
interests in or to any of the Licensed Trademarks, nor shall Publisher register
any trademark in its own name or in the name 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.
12.2.2 LICENSE OF SONY MATERIALS AND PLAYER. All rights with
respect to the Sony Materials and Player, including, without limitation, all of
SCEA's 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 Player (or any
portion thereof), other than the non-exclusive license during the term hereof
to use the Sony Materials and Player for the manufacturing, marketing,
distribution and sale of the Licensed Products solely in accordance with the
provisions of this Agreement. 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 and/or interests in or to the Sony Materials or the Player (or any
portion thereof).
13. INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS BY THIRD PARTIES.
In the event that either Publisher or SCEA discovers or otherwise becomes aware
that any of the Intellectual Property Rights of the other have been or are
being infringed upon by any third party, then the party with knowledge of such
infringement or apparent infringement shall promptly notify the other party.
SCEA shall have the sole right, in its discretion, to institute and prosecute
lawsuits against Third Parties for such infringement of SCEA's Intellectual
Property Rights. Publisher shall have the right, in its discretion, to
institute and prosecute lawsuits against third persons for such infringement of
Publisher's Intellectual Property Rights which are distinct from SCEA's
Intellectual Property Rights. If Publisher does not institute an infringement
suit within thirty (30) days after SCEA's written request that it do so, SCEA
may institute and prosecute such lawsuit. Any lawsuit shall be prosecuted
solely at the cost and expense of the party bringing suit and all sums
recovered in any such lawsuits, whether by judgment, settlement or otherwise,
in excess of the amount of reasonable attorneys' fees and other out of pocket
expenses of such suit, shall belong solely to the party bringing the suit. Upon
request of the party bringing the lawsuit, the other party shall execute all
papers, testify on all matters and otherwise cooperate in every way necessary
and desirable for the prosecution of any such lawsuit. The party bringing suit
shall reimburse the other party 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.
14. CONFIDENTIALITY.
14.1 PRIOR NONDISCLOSURE AGREEMENT. Publisher hereby reaffirms and
ratifies the Nondisclosure Agreement dated January 19, 2000 between SCEA and
Publisher ("Nondisclosure Agreement") which, as amended by Section 14.2 below,
will remain in full force and effect with respect to the Confidential
Information of SCEA throughout the term of this Agreement.
14.2 ADDITIONAL REQUIREMENTS REGARDING CONFIDENTIAL INFORMATION OF SCEA.
14.2.1 CONFIDENTIAL INFORMATION OF SCEA. "Confidential Information"
of SCEA (as defined in the Nondisclosure Agreement and amended hereby) shall
also include (i) the Sony Materials and information regarding SCEA's finances,
business, marketing and technical plans, (ii) all documentation and information
relating to the foregoing (other than documentation and information expressly
intended for use by and released to end users or the general public), (iii) any
and all other information, of whatever type and in whatever medium (including
without limitation all data, ideas, discoveries, developments, know-how, trade
secrets, inventions, creations and improvements), that is disclosed in writing
or in any other form by SCEA to Publisher, and (iv) this Agreement and the terms
and conditions thereof. If at any time Publisher becomes aware of any
unauthorized duplication, access, use, possession or knowledge of any
Confidential Information of SCEA, it shall notify SCEA as soon as reasonably
practicable, and shall promptly act to recover any such information and/or
prevent further breach of the confidentiality obligations herein. Publisher
shall take all reasonable steps requested by SCEA to prevent the recurrence of
any unauthorized duplication, access, use, possession or knowledge of the
Confidential Information of SCEA.
14.2.2 CONFIDENTIALITY OF AGREEMENT. As provided above, the terms
and conditions of this Agreement shall be treated as Confidential Information
of SCEA;
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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; and (iii) in confidence, in connection
with the enforcement of this Agreement or rights under this Agreement; and (iv)
if Publisher shall be required, in the opinion of counsel, to file publicly or
otherwise disclose the terms of this Agreement under applicable federal and/or
state securities laws, Publisher shall be required to promptly notify SCEA such
that SCEA has a reasonable opportunity to contest or limit the scope of such
required disclosure, and Publisher shall request, and shall use its best
efforts to obtain, confidential treatment for such sections of this Agreement
as SCEA may designate. Any failure to notify SCEA under clause (iv) of this
Section 14.2.2 shall be deemed a material breach of this Agreement. Unless
otherwise permitted by SCEA, both parties shall treat the fact that they have
entered into this Agreement as Confidential Information of the other party
until a public announcement regarding the execution of this Agreement is
released by SCEA, at its sole discretion, announcing that Publisher has become
a licensee of SCEA.
14.3 REQUIREMENTS REGARDING CONFIDENTIAL INFORMATION OF PUBLISHER.
14.3.1 CONFIDENTIAL INFORMATION OF PUBLISHER. "Confidential
Information of Publisher" shall mean (i) the Licensed Developer 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 expressly
intended for use by and release to end users, the general public or the trade),
and (ii) information relating to Publishers' or its affiliates' or licensors'
finances, business, marketing and technical plans, that is disclosed in writing
or in any other form by Publisher to SCEA.
14.3.2 PRESERVATION OF CONFIDENTIAL INFORMATION OF PUBLISHER. SCEA
shall hold all Confidential Information of Publisher in confidence, and shall
take all reasonable steps necessary to preserve the confidentiality of the
Confidential Information of Publisher, and to prevent it from falling into the
public domain or into the possession of persons other than those persons to
whom disclosure is authorized hereunder, including but not limited to those
steps that SCEA takes to protect the confidentiality of its own most highly
confidential information. Except as may be expressly authorized by Publisher in
writing, SCEA shall not at any time, either before or after any termination of
this Agreement, directly or indirectly: (i) disclose any 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 purposes; (ii)
except as otherwise provided in this Agreement, duplicate the Confidential
Information of Publisher for any purpose whatsoever, (iii) use the Confidential
Information for any reason or purpose other than as expressly permitted in this
Agreement; or (iv) except as otherwise provided in Section 8.3, remove any
copyright notice, trademark notice and/or other proprietary legend set forth on
or contained within any of the Confidential Information of Publisher.
14.3.3 OBLIGATIONS UPON UNAUTHORIZED DISCLOSURE. If at any time SCEA
becomes aware of any unauthorized duplication, access, use, possession or
knowledge of any Confidential Information of Publisher, it shall notify the
Publisher as soon as is reasonably practicable. SCEA shall provide any and all
reasonable assistance to Publisher to protect Publisher's proprietary rights in
any Confidential Information of Publisher 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, commencement 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 the Confidential Information
of Publisher. SCEA shall take all reasonable steps requested by Publisher to
prevent the recurrence of any unauthorized duplication, access, use, possession
or knowledge of the Confidential Information of Publisher.
14.3.4 EXCEPTIONS. The foregoing restrictions will not apply to
information that could be deemed to be Confidential Information of Publisher to
the extent that such information: (i) was known to SCEA at the time of
disclosure to it; (ii) becomes part of information in the public domain through
no fault of SCEA; (iii) has been rightfully received from a third party
authorized by Publisher to make such disclosure without restriction; (iv) has
been approved for release by prior written authorization of Publisher; or (v)
has been disclosed by court order or as otherwise required by law (including
without limitation to the extent that disclosure may be required under Federal
or state securities laws), provided that SCEA has notified the disclosing party
immediately upon learning of the possibility of any such court order or legal
requirement and has given Publisher a reasonable opportunity to contest or
limit the scope of such required disclosure.
15. TERM AND TERMINATION.
15.1 EFFECTIVE DATE; TERM. This Agreement shall not be binding upon the
parties until it has been signed by or on behalf of each party, in which event
it shall be effective as of the date first written above (the "Effective
Date"). Unless sooner terminated in accordance with the provisions hereof, the
term of this Agreement shall be for four (4) years from the Effective Date.
15.2 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 events or circumstances:
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(i) If Publisher breaches (A) any of its material obligations provided for
in this Agreement (including but not limited to Publisher's failure to pay any
amounts due hereunder), which materiality shall be determined by SCEA in its
sole discretion; (B) some of its obligations provided for in this Agreement,
the combined effect of which has a material effect hereunder; or (C) any other
agreement entered into between SCEA or Affiliates of SCEA and Publisher. In the
event of each such breach, Publisher shall have an opportunity to correct or
cure such breach within thirty (30) days after receipt of written notice of
such breach by SCEA, provided that, if after such thirty (30) day period, such
breach is not corrected or cured to SCEA's satisfaction, this Agreement shall
be terminated.
(ii) Publisher's statement that it is unable to pay any amount due
hereunder, or is unable to pay its debts generally as they shall become due.
(iii) Publisher's filing of an application for, or consenting to, or
directing the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of all or substantially all of Publisher's
property, whether tangible or intangible, wherever located.
(iv) The making by Publisher of a general assignment for the benefit of
creditors.
(v) The commencing by Publisher or Publisher's intention to commence a
voluntary case under any applicable bankruptcy laws (as now or hereafter may be
in effect).
(vi) Publisher is bankrupt or insolvent.
(vii) The filing by Publisher or the intent to file by Publisher of a
petition seeking to take advantage of any other law providing for the relief of
debtors.
(viii) Publisher's acquiescence to, intention to acquiesce to, or failure
to have dismissed within ninety (90) days, any petition filed against it in any
involuntary case under any such bankruptcy law.
(ix) 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.
(x) If during the term of this Agreement a controlling interest in
Publisher or a controlling interest in an entity which has, directly or
indirectly, 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, and such
agreement has been terminated as a result of such breach; (B) directly or
indirectly holds or acquires an interest in a third party which develops any
interactive hardware device or product which is directly or indirectly
competitive with the Player; (C) is in litigation with SCEA or Affiliates of
SCEA concerning any proprietary technology, trade secrets or other Intellectual
Property Rights or Confidential Information of SCEA. As used in this Section
15.2, "controlling interest" means, with respect to any form of entity,
sufficient power, whether by holding shares of stock, management power, voting
power or power conferred on such person by the Certificate of Incorporation,
Bylaws, Partnership Agreement or other documents regulating the form and powers
of such entity, to control the decisions of such entity.
(xi) If during the term of this Agreement Publisher, or an entity that
has, directly or indirectly, 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 hardware device or
product which is directly or indirectly competitive with the Player.
Publisher shall be obligated to immediately notify SCEA in the event that any
of the events of circumstances specified in subsections (ii) - (xi) occur, and
any failure to so notify SCEA shall constitute a material breach with no
opportunity to cure such breach.
15.3 PRODUCT-BY-PRODUCT TERMINATION BY SCEA. In addition to the events of
termination described in Section 15.2, 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 7.1.3
hereto, and such breach is not corrected or cured prior to the earlier of (i)
thirty (30) days after receipt of written notice of such breach or (ii)
commercial release of the product; or (b) any third party with whom Publisher
has contracted for the development of Executable Software breaches any of its
material obligations to SCEA pursuant to such third party's agreement with
SCEA with respect to such Executable Software; or (c) Publisher cancels a
Licensed Product or fails to provide SCEA in accordance with the provisions of
Section 5.4 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, or fails to provide work in progress to SCEA
in accordance with the Review Process in Section 5.3.
15.4 OPTION OF SCEA IN LIEU OF TERMINATION. As an alternative to
terminating this Agreement or a particular Licensed Product as set forth in
Sections 15.2 and 15.3 above, SCEA may, at its option, require Publisher to pay
liquidated damages of up to [*] per incident (as defined in the sole discretion
of SCEA) for the following material breaches of Publisher; providing Sony
Materials or Confidential Information of SCEA to an unlicensed developer or
other third party; failure to follow the Guidelines of SCEA with respect to any
Licensed Trademarks; and failure to provide SCEA with Advertising Materials, or
broadcasting or publishing Advertising Materials without the approval of SCEA,
as provided in Section 5.7. Such liquidated damages shall be required in SCEA's
sole discretion depending on the
[*] Confidential portion omitted and filed separately with the Commission.
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circumstances, including the extent and type of injury flowing from the breach,
and SCEA's expectations for future performance of Publisher. In the event that
SCEA selects this option, Publisher shall be entitled to terminate this
Agreement upon notice to SCEA rather than paying the liquidated damages
hereunder. Election of this option by SCEA shall not constitute a waiver of any
of SCEA's rights under this Agreement with respect to any other incidents and
SCEA shall have the right to terminate this Agreement with respect to any other
material breach.
15.5 NO REFUNDS. In the event of the termination of this Agreement in
accordance with any of the provisions of Sections 15.2 through 15.4 above, no
portion of any payments of any kind whatsoever previously provided to SCEA
hereunder shall be owed or be repayable to Publisher.
16. EFFECT OF EXPIRATION OR TERMINATION.
16.1 INVENTORY STATEMENT. Within thirty (30) days of the date of
expiration or the effective date of termination with respect to any and/or all
Licensed Products, 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/or statement.
16.2 REVERSION OF RIGHTS. Upon expiration or termination and subject to
Section 16.3 below, the licenses and related rights herein granted to Publisher
shall immediately revert to SCEA, and Publisher shall cease and desist from any
further use of Confidential Information of SCEA, the Licensed Trademarks and
the Sony Materials and any Intellectual Property Rights therein, and, subject
to the provisions of Section 16.3 below, Publisher shall have no further right
to continue the publication, manufacture, marketing, sale and/or distribution
of any Units of the Licensed Products, nor to continue to use the Licensed
Trademarks; provided, however, that for a period of one year after termination,
and subject to all the terms of Section 14, and provided this Agreement is not
terminated due to a breach or default of Publisher, Publisher may retain such
portions of Sony Materials 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.
16.3 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.
16.4 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 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, including, without
limitation, any such information, knowledge or know-how of which either party,
as the receiving party, was apprised and which was reduced to tangible or
written form by such party or in its behalf at any time during the term of this
Agreement. Within five (5) working days after any such destruction, Publisher
shall provide SCEA with an itemized statement certified to be accurate by an
officer of Publisher, indicating the number of copies and/or units of the Sony
Materials 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.
16.5 RENEWAL OR EXTENSION OF THIS AGREEMENT; TERMINATION WITHOUT PREJUDICE.
SCEA shall be under no obligation to renew or 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,
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.
However, the expiration of this Agreement shall not excuse either party from
its previous breach of any of the provisions of this Agreement or from any
obligations surviving the expiration of this Agreement, and full legal and
equitable remedies shall remain available for any breach or threatened breach
of this Agreement or any obligations arising therefrom. The expiration or
termination of this Agreement shall be without prejudice to any rights or
remedies which one party may otherwise have against the other party.
17. MISCELLANEOUS PROVISIONS.
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17.1 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, return receipt requested, or sent
by recognized international courier service (e.g., Federal Express, DHL, etc.),
telex, 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 receipt, as confirmed by the sending party.
17.2 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, fire, 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; or compliance with any law, regulation or
order (whether valid or invalid) of any governmental body, other than an order,
requirement or instruction arising out of Publisher's violation of any
applicable law or regulation; 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
by SCEA prior to, during or after any such Force Majeure condition. In the event
that the Force Majeure condition continues for more than one hundred and twenty
(120) days, SCEA may terminate this Agreement for cause by providing written
notice to Publisher to such effect.
17.3 NO 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.
17.4 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 15.2(x). Any attempted or purported assignment,
delegation or other such transfer, directly or indirectly, without the required
consent of SCEA shall be void and a material breach of this Agreement. Subject
to the foregoing, this Agreement shall inure to the benefit of the parties and
their respective successors (other than under the conditions set forth in
Section 5.2(x)) and permitted assigns. SCEA shall have the right to assign any
and all of its rights and obligations hereunder to any affiliate(s), including,
without limitation, its obligations under Section 7 hereof.
17.5 SUBCONTRACTORS. Publisher shall not sell, assign, delegate,
subcontract, sublicense or otherwise transfer or encumber all or any portion of
the licenses herein granted; provided, however, that Publisher may retain those
subcontractor(s) to assist with the development of Licensed Products which: (i)
have signed a Nondisclosure Agreement and a Developer Agreement with SCEA (the
"PlayStation Agreements") in full force and effect throughout the term of such
development; or (ii) have signed an SCEA-approved subcontractor agreement
between Publisher and subcontractor, which subcontractor agreement shall contain
substantially identical terms to the Nondisclosure Agreement and the
confidentiality provisions of this Agreement ("Subcontractor Agreement"). If a
subcontractor will use Development Tools provided by Publisher, it must also
comply with the requirements set forth in Section 16.5 of an LDA with respect to
usage of such Development Tools. 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
respect with the terms and conditions of this Agreement. Publisher agrees to
provide a copy of any such Subcontractor Agreement to SCEA prior to and
following execution thereof. Publisher shall not disclose to any subcontractor
any Confidential Information of SCEA (as defined herein and in the Nondisclosure
Agreement), including, without limitation, any Sony Materials, unless and until
either the PlayStation Agreements or a Subcontractor Agreement have been
executed. 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 17.5. Publisher shall use its
best efforts to cause its subcontractors employed hereby to comply in all
respects with the terms and conditions of this Agreement, and hereby
unconditionally guarantees all obligations of its subcontractors.
17.6 COMPLIANCE WITH APPLICABLE LAWS. The parties shall at all times comply
with all applicable
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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).
17.7 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and integrated 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 the County of San Mateo, State of California (if under
State law) or the Northern District of California (if under Federal law or
pursuant to diversity jurisdiction). Each of the parties hereby submits itself
to the exclusive jurisdiction and venue of such 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 17.1 above. In addition, each party hereby waives the right to a jury
trial in any action or proceeding brought to enforce the terms of this
Agreement or to adjudicate any dispute arising hereunder.
17.8 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.
17.9 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, 5, 6, 7.1, 12 and 14 of this Agreement would cause
irreparable harm to SCEA, the extent of which would be difficult to ascertain.
Accordingly, Publisher agrees that, in addition to any other remedies 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 enjoining any breach or threatened breach of any or all of
such provisions. 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 such breach.
17.10 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.
17.11 SECTIONS SURVIVING EXPIRATION OR TERMINATION. The following sections
shall survive the expiration or earlier termination of this Agreement for any
reason: 4, 5.5, 6, 7.2, 7.4, 9, 10, 11, 12, 14, 15.5, 16, 17.4, 17.5, 17.6,
17.7, 17.8, 17.9 and 17.10.
17.12 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.
17.13 MODIFICATION. No modification of any provision of this Agreement
shall be effective unless in writing and signed by both of the parties.
17.14 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.
17.15 INTEGRATION. This Agreement (together with the Exhibits attached
hereto) 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; provided, however, that notwithstanding
anything to the contrary in the foregoing, the Nondisclosure Agreement referred
to in Section 14 hereto shall remain in full force and effect.
17.16 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.
17.17 CONSTRUCTION. This Agreement shall be fairly interpreted in
accordance with its terms and without any
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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 BAM! [ILLEGIBLE]
By: /s/ XXXX XXXXXXXX By: /s/ XXX XXXXX
----------------------------------- ----------------------------
Print Name: Xxxx Xxxxxxxx Print Name: Xxx Xxxxx
--------------------------- --------------------
Title: VP Third Party/R&D Title: President
-------------------------------- -------------------------
Date: 2/11/00 Date: 2/10/00
--------------------------------- --------------------------
NOT AN AGREEMENT UNTIL
EXECUTED BY BOTH PARTIES
-22- CONFIDENTIAL
23
EXHIBIT A
ROYALTIES
A. LICENSED PRODUCT PER UNIT ROYALTY. The per Unit royalty due under Section
9 of the Agreement with respect to each Licensed Product shall be [*],
unless otherwise set forth below.
B. SCEA ESTABLISHED THIRD PARTY DEMO DISC PROGRAM ROYALTIES. Publisher shall
pay SCEA a per Unit royalty in United States dollars of [*] for each Unit
of the Consumer Promotional Disc Program and the Trade Promotional Disc
Program manufactured. The quantity of Units ordered shall comply with the
terms of such SCEA Established Third Party Demo Disc Program. Payment of
such royalties shall be made to SCEA in conjunction with the payments to
SCEA of the manufacturing costs for each Unit and pursuant to the terms
and conditions set forth in Sections 7.2.3 and 9 hereto and in such SCEA
Established Third Party Demo Disc Program.
C. ADJUSTMENTS TO LICENSED PRODUCT ROYALTY - HIT TITLE REBATE
1. In the event that the total purchases by Publisher from SCEA with
respect to any Licensed Product exceed the following numbers of
Units during the first three (3) years after first commercial
shipment of such Licensed Product, Publisher shall be entitled to a
rebate with respect to royalties paid by Publisher to SCEA pursuant
to Section 9 of the Agreement ("Hit Title Rebate") which shall be
credited to Publisher's account as provided below, as follows:
VOLUME ROYALTY REBATE
------ --------------
a. Over [*] Units and up to [*] Units [*] of Royalty paid with
respect to such Units
b. Over [*] Units and up to [*] Units [*] of Royalty paid with
respect to such Units
c. Over [*] Units and up to [*] Units [*] of Royalty paid with
respect to such Units
d. Over [*] Units and up to [*] Units [*] of Royalty paid with
respect to such Units
e. Over [*] Units [*] of Royalty paid with
respect to such Units.
2. SCEA shall credit Publisher's account for the Hit Title Rebates as
follows: (i) if Publisher's initial order for a Licensed Product is
less than the Hit Title Rebate threshold provided in C.1.a above,
then SCEA shall credit Publisher's account sixty (60) days
following the date that Publisher notifies SCEA that sales of a
Licensed Product exceed the Hit Title Rebate threshold, subject to
SCEA's right to confirm such information; (ii) if Publisher's
initial order for a Licensed Product reaches or exceeds the Hit
Title Rebate threshold provided in C.1.a above, then Publisher may
credit the Hit Title Rebate amount set forth above as a separate
line item on the Purchase Order with respect to such Licensed
Product. It is Publisher's responsibility to inform SCEA when it
reaches a Hit Title Rebate threshold, and Publisher shall not take
a Hit Title Rebate as a separate line item on a Purchase Order
without discussing first with SCEA.
3. The Hit Title Rebate may not be used in conjunction with any
royalty reduction program of Sony in effect from time to time,
including but not limited to any "Greatest Hits" program, nor shall
a Hit Title Rebate be taken on a Third Party Demo Disc program or
any promotional program of SCEA.
4. Each Licensed Product shall be considered independently for
purposes of calculating the Hit Title Rebate and the rebates shall
be [*]. By way of example:
a. If Publisher's aggregate shipments for a single Licensed
Product are less than [*] Units, [*].
* Confidential portions omitted and filed separately with the Commission.
- 23 - CONFIDENTIAL
24
b. If Publisher's aggregate shipments for a single Licensed Product
exceed [*] but are less than [*] Units, Publisher will be entitled
to receive [*] of the Royalty paid as a rebate with respect to the
first [*] Units, at the time Publisher is invoiced for such excess
order, and shall thereafter be charged a per Unit royalty of $[*]
less [*], until Units of the Licensed Product shipped exceed [*]
Units.
c. If Publisher's aggregate orders for a single Licensed Product
exceed [*] Units, but are less than [*] Units,
Publisher will receive [*] of the Royalty paid as a rebate with
respect to the first [*] Units, at the time Publisher is
invoiced for such excess order, and shall thereafter be charged a
per Unit royalty of $[*] less [*], until Units of the Licensed
Product shipped exceed [*] Units. Please note that in this
case Publisher will only receive a [*] additional rebate with
respect to the first [*] Units because it has already
received a [*] rebate on such Units.
* Confidential portions omitted and filed separately with the Commission.
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EXHIBIT B
[PLAYSTATION LOGO]
SCEA THIRD PARTY ACCOUNTABILITY REPORT
Product Codes SLUS-FAKE
Title: Super Fake Bug Date: 7/8/98 Rev. No. 1.0 First Rev Date: 7/8/98
Lead Analyst Genre Action/Arcade No of Discs 1
Acct. Manager View 3/4 Overhead ESRB T
Publisher F for Fake, L.T.D. Environment 3-D Total Revs 1
Developer Not Even Real Prod. No of Players Up to 2 Players
Controllers Analog Pad
Misc Periph Memory Card
SUPER FAKE BUG still contains problems.
Some of these problems may have been waived by the Account Manager, [*]
Third Party Quality Assurance highly recommends correcting all Class
"A" bugs, and all "TRC" and "Guideline" issues.
We also recommend that all remaining Class "B", "C" and "D" bugs be corrected
where possible.
The publisher, F FOR FAKE, L.T.D. assumes full responsibility for these
problems.
[1] A BUGS [1] B BUGS [1] C BUGS [1] D BUGS [1] GUIDELINE ISSUES [1] CONTENT
ISSUES [1] TRC ISSUES
Options used should be assumed to be default settings except where noted.
Class= A
BUG NO. [A1] DATE [7/8/98] CATEGORY [Crash] REV [1.0] REV FIXED [N/A] FREQUENCY
[Always] STATUS [Open] EXPLANATION [Not Fixed] [100%]
BUG DESCRIPTION
In Fakeland, Act 2, if the user jumps onto the third lilypad from the left, the
game freezes. At this point, the system had to be reset.
Class= B
BUG NO. [B1] DATE [7/8/98] CATEGORY [Collision] REV [1.0] REV FIXED [N/A]
FREQUENCY [Always] STATUS [Open] EXPLANATION [Not Fixed] [100%]
BUG DESCRIPTION
In Space Odyssey, when Dr. Strangelove appears at the Overlook hotel and knocks
on the door, if the user repeatedly pushes up on the D-Pad, Dr. Strangelove
passes through the door.
* Confidential portion omitted and filed separately with the Commission.
1
26
SCEA THIRD PARTY ACCOUNTABILITY REPORT FOR:
SUPER FAKE BUG
------------------------------------------------------------------------------------------------
CLASS = C
------------------------------------------------------------------------------------------------
Bug No. C1 Date 7/8/98 Category Graphics Rev. 1.0 Rev. Fixed N/A Frequency Always
Status Open Explanation Not Fixed 100%
BUG DESCRIPTION
During any instant replay, if the camera is rotating while the ball is in
motion from a kick, the entire screen jitters (shakes).
EXPECTED: The screen should not jitter or shake when using normal functions
during replay mode.
------------------------------------------------------------------------------------------------
CLASS = D
------------------------------------------------------------------------------------------------
Bug No. D1 Date 7/8/98 Category Comment Rev. 1.0 Rev. Fixed N/A Frequency Always
Status Open Explanation Not Fixed 100%
BUG DESCRIPTION
The hedge maze outside the Overlook hotel does not contain snow. To enhance
gameplay appeal, snow and ice should be added to the hedge maze design.
-----------------------------------------------------------------------------------------------
CLASS = TECHNICAL REQUIREMENT
-----------------------------------------------------------------------------------------------
Bug No. TRC 1 Date 7/8/98 Category TRC Rev. 1.0 Rev. Fixed N/A Frequency Always
Status Open Explanation Not Fixed 100%
BUG DESCRIPTION
No calibration mode is available for the Dual Analog controller. As outlined in
the SONY Technical Requirements Checklist (Ver 1.2, Sec 11.2.1, Page 13) "There
is a calibration mode [for Analog Joystick]."
----------------------------------------------------------------------------------------------------------
CLASS = GUIDELINE
----------------------------------------------------------------------------------------------------------
Bug No. Guideline 1 Date 7/8/98 Category Guideline Rev. 1.0 Rev. Fixed N/A Frequency Always
Status Open Explanation Not Fixed 100%
BUG DESCRIPTION
The triangle button does not take the user back to the previous menu. As
outlined in the SONY User Interface Guidelines (Ver 2.0, Sec 4.5, page A-3)
"The triangle button should be used to take the user to the previous menu."
2
27
SCEA THIRD PARTY ACCOUNTABILITY REPORT FOR:
SUPER FAKE BUG
-----------------------------------------------------------------------------------------------------
CLASS = CONTENT
-----------------------------------------------------------------------------------------------------
Bug No. Content 1 Date 7/8/98 Category Content Rev. 1.0 Rev. Fixed N/A Frequency Always
Status Open Explanation Not Fixed 100%
BUG DESCRIPTION
In the Overlook hotel, the paintings on the wall contain images of naked women.
-----------------------------------------------------------------------------------------------------
1 A BUGS 1 B BUGS 1 C BUGS 1 D BUGS 1 GUIDELINE ISSUES 1 CONTENT ISSUES 1 TRC ISSUES
-----------------------------------------------------------------------------------------------------
--------------------------------- ----------------------------------
-VP Third Party -Quality Assurance Director
--------------------------------- ----------------------------------
-Account Manager -Publisher Representative
SUPER FAKE BUG
3
28
EXHIBIT C
[SONY LOGO] ADVERTISING/PRINTED MATERIAL ACCOUNTABILITY FORM
PAGE 1 OF 1
BASIC INFORMATION
PRODUCT NUMBER DATE
--------------------------------------------------------------------------------
TITLE VERSION
--------------------------------------------------------------------------------
SCEA ACCOUNT MANAGER E-MAIL ADDRESS
--------------------------------------------------------------------------------
PUBLISHER DEVELOPER
--------------------------------------------------------------------------------
SUBMISSIONS CONTACT PHONE FAX
--------------------------------------------------------------------------------
ADVERTISEMENT/PRINTED MATERIAL CHECKLIST
TYPE OF MEDIA BEING SUBMITTED:
--------------------------------------------------------------------------------
INTENDED USE:
--------------------------------------------------------------------------------
RELEASE DATE OF ADVERTISEMENT/PRINTED MATERIAL:
--------------------------------------------------------------------------------
[ ] Advertising material will not be created for this title.
NOTES:
----------------------------------------------------------------------
----------------------------------------------------------------------
ADVERTISING/PRINTED MATERIAL: Pre-production samples of the advertising,
merchandising, promotional, and display material of or concerning the Licensed
Products (collectively referred to hereinafter as the "Advertising Materials")
shall be submitted by Publisher to SCEA, free of cost, for SCEA's evaluation
and approval as to quality, style, appearance, usage of any of the Licensed
Trademarks, and appropriate reference of any required legal notices, prior to
any actual production, use, or distribution of any such items by Publisher or
in its behalf. No such proposed Advertising Material shall be produced, used or
distributed directly or indirectly by Publisher without first obtaining the
written approval of SCEA which approval will not be unreasonably withheld or
delayed. SCEA may require Publisher to immediately withdraw and reprint any
Advertising Materials for the Licensed Product which have been published but
they have not received the written approval of SCEA. Failure to follow the SCEA
guidelines for use of Licensed Trademarks and Advertising Materials shall be
considered a material breach of Publisher's License Agreement with SCEA.
PRODUCT MANAGEMENT: By signing this form, the Publisher confirms that all
guidelines required by SCEA have been followed in the preparation of this
product advertising.
SIGNATURE TITLE DATE
--------------------------------------------------------------------------------
SUBMISSION INFORMATION
SUBMISSION: After assembling the required materials, please forward them
with a copy of this completed form to:
Packaging/Advertising Coordinator
SCEA
000 X. Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, XX 00000
Phone: 000-000-0000 or 3549
29
EXHIBIT D
[FORM OF LETTER REGARDING SCEA DEMO DISCS]
VIA FAX
[Date]
[Name]
[Third Party Name]
[Address]
Re: [Specify SCEA Demo Disc Program]
Dear ________________:
This letter confirms that Sony Computer Entertainment America ("SCEA") would
like to include the Product Information (listed below) of your PlayStation game
(listed below) in the following Demo Disc:
Game Title:
Type of Product Information Required:
Demo Disc program:
Deadline:
Date of Licensed Publisher Agreement:
Please return a signed copy of this letter to ________ by fax at _________ and
submit the Product Information directly to SCEA's consultant, ________________,
no later than the Deadline set forth above. Failure to provide this
acknowledged letter and the code, by this date, will result in removal of your
Product Information from the Demo Disc.
The inclusion of your Product Information is subject to the terms and
conditions of the Licensed Publisher Agreement between SCEA and you.
Very truly yours, AGREED AND ACKNOWLEDGED BY:
[PUBLISHER]
By: _______________________________
Title: ____________________________
Date: _____________________________
cc: Legal Department
-27-