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EXHIBIT 10.27
(Confidential Portions Omitted)
AMENDMENT TO THE
LICENSED PUBLISHER AGREEMENT
AMENDMENT, dated as of April 1, 2000 ("Amendment") between Sony Computer
Entertainment America Inc., located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ ("SCEA") and Bay Area Multimedia, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Publisher") to the Licensed Publisher
Agreement dated as of February 2, 2000 between SCEA and Publisher (the
"Agreement" or "LPA"). Capitalized terms used herein and not defined shall have
the meanings attributed to them in the LPA.
WHEREAS, SCEA has recently announced changes to the royalty structure for
Licensed Products for the Player;
WHEREAS, SCEA desires to amend the LPA to effectuate these royalty changes upon
execution of the Amendment, in addition to making various other changes to
SCEA's Third Party program;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Publisher and SCEA hereby agree to amend the
LPA as follows:
1. Effective upon execution hereof, the following Definition is hereby amended
and restated in its entirety:
1.16 "Licensed Products" means the Executable Software (which may be
combined with Executable Software of two or more Licensed Developers), which
shall consist of one product developed for the Player per Unit, in final form
developed exclusively for the Player. Publisher shall have no right to package
or bundle more than one product developed for the Player in a single Unit unless
separately agreed with SCEA.
2. Effective upon execution hereof, the following new Definition is hereby
incorporated into the LPA:
1.39 "Wholesale Price" or "WSP" shall mean the greater of (i) the first
published priced of the Licensed Product offered to retailers by Publisher as
evidenced by a sell sheet or price list issued by Publisher, or (ii) the actual
price paid by resellers upon the first commercial shipment of a Licensed Product
without offsets, rebates or deductions from invoices of any kind.
3. Effective upon execution hereof, the following sentence is hereby added to
the end of Section 4.3:
Notwithstanding the foregoing, Publisher shall not distribute or transmit
Product Software which is intended to be used with the Player via electronic
means or any other means now known or hereafter devised, including without
limitation, via wireless, cable, fiber optic means, telephone lines, microwaves
and/or radio waves, or other network of computers or other devices, except as
otherwise permitted in Section 4.2 herein.
4. Effective upon execution hereof, the following sentence is hereby added to
the end of Section 7.1.4:
SCEA reserves the right to insert, or to require Publisher to insert,
certain Printed Materials relating to the Player or Licensed Trademarks into
each Unit of Licensed Products.
5. Effective upon execution hereof, the following new Section 8.8 is hereby
incorporated into the LPA:
8.8 PlayStation Website. All Licensed Publisher shall be required to
provide Product Identification for a web page for each of its Licensed Products
for display on the PlayStation promotional
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website, or other website or websites as may be operated by SCEA from time to
time in connection with the promotion of the PlayStation brand. Specifications
for Product Information for such web pages shall be as provided in the
SourceBook. Publisher shall provide SCEA with such Product Information for each
Licensed Product upon submission of Printed Materials to SCEA for approval in
accordance with Section A6 herein. Publisher shall also provide updates to such
web page in a timely manner as required by SCEA in updates to the SourceBook. In
addition, Publisher shall use its best efforts to provide Product Information
for web pages for Publisher's Licensed Products released from the launch of the
Player to the date of execution hereof within sixty (60) days of either
execution of this Amendment or receipt of specifications provided separately by
SCEA for the integration of such web page, whichever occurs later. In the event
that Publisher is unable to provide Product Information for previously released
Licensed Products within the time frame set forth above, then SCEA may create
Product Information relating to such previously released Licensed Products and
provide it to Publisher for approval. Failure of Publisher to approve such web
pages within ten (10) days after receipt thereof will be deemed approval.
6. Effective upon execution hereof, Section 15.4 of the LPA is hereby
amended and restated in the entirety to read as follows:
15.4 Options of SCEA in Lieu of Termination. As alternatives 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 and upon written notice to
Publisher, take the following actions in lieu of terminating this Agreement. In
the event that SCEA elects either of these options, Publisher may terminate this
Agreement upon written notice to SCEA rather than allowing SCEA to exercise
these options. Election of these options by SCEA shall not constitute a waiver
of or compromise with respect to any of SCEA's rights under this Agreement and
SCEA may elect to terminate this Agreement with respect to any breach.
15.4.1 Suspension of Agreement. SCEA may suspend this Agreement, entirely
or with respect to a particular Licensed Product or program, for a set period
of time which shall be specified in writing to Publisher upon the occurrence of
any breach of this Agreement.
15.4.2 Liquidated Damages. Whereas a minor breach of any of the events set
out below may not warrant termination of this Agreement, but will cause SCEA
damages in amounts difficult to quantify, SCEA may require Publisher to pay
liquidated damages of [*] per event, as follows:
(i) Failure to submit Advertising Materials to SCEA for approval
(including any required resubmissions);
(ii) Broadcasting or publishing Advertising Materials without receiving
the final approval or consent of SCEA;
(iii) Failure to make SCEA's requested revisions to Advertising
Materials; or
(iv) Failure to comply with the SourceBook, Manufacturing Specifications
or Guidelines which relates in any way to use of Licensed Trademarks.
Liquidated damages shall be invoiced separately or on Publisher's next invoice
for Licensed Products. SCEA reserves the right to terminate this Agreement for
breach in lieu of seeking liquidated damages or in the event that liquidated
damages are unpaid.
7. Effective upon execution hereof, Exhibit A, Section A of the Agreement is
hereby amended and restated in its entirety to read as follows:
A. Applicable Royalties on Licensed Products.
* Confidential portion omitted and filed separately with the Commission.
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1. Initial Orders. Publishing shall pay SCEA, either directly or through its
designee, a per title royalty in United States dollars for each Unit of the
Licensed Products initially released after execution of the Amendment based
on the initial Wholesale Price of the Licensed Products, as follows:
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Wholesale Price Per Title Royalty
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[*] $[*] to $[*] $[*]
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[*] $[*] to $[*] $[*]
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[*] $[*] to $[*] $[*]
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[*] $[*] to $[*] $[*]
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[*] $[*] + [*]
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In the absence of satisfactory evidence to support the WSP, the royalty
rate that shall apply will be [*] per Unit. For purposes of this Amendment,
Units of Licensed Products shall be considered "released" when Units first begin
to chip from a Designated Manufacturing Facility.
2. Reorders and Other Programs. Royalties on Licensed Products initially
released prior to execution of this Amendment shall be [*] per Unit. Royalties
on additional orders to manufacture a specific Licensed Product shall be the
royalty determined by the initial Wholesale Price as reported by Publisher for
the Licensed Product regardless of the wholesale price of the Licensed Product
at the time of reorder, except in the event that the Wholesale Price increases
for such Licensed Product, in which case the royalty shall be adjusted upwards
to reflect the higher Wholesale Price. Licensed Products qualifying for SCEA's
"Greatest Hits" programs or other programs offered by SCEA shall be subject to
the royalties applicable for such programs.
3. Payment. At the time of placing an order to manufacture a Licensed
Product, Publisher shall submit to SCEA an accurate accounting statement setting
out the number of Units of Licensed Product to be manufactured, projected
initial wholesale price, applicable royalty, and total amount due SCEA. In
addition, Publisher shall submit to SCEA prior to placing the initial order for
each Licensed Product a separate certification, in the form provided by SCEA in
the SourceBook, signed by officers of Publisher that certifies that the
Wholesale Price provided to SCEA is accurate and attaching such documentation
supporting the WSP as requested by SCEA. The accounting statement due hereunder
shall be subject to the audit and accounting provisions set forth below.
4. Audit Provisions. Publisher shall keep full, complete, and accurate
books of accounts and records covering all transactions relating to this
Agreement. Publisher shall preserve such books of account, records, documents,
and material for a period of twenty-four (24) months after the expiration or
earlier termination of this Agreement. Acceptance by SCEA of an accounting
statement, purchase order, or payment hereunder will not preclude SCEA from
challenging or questioning the accuracy thereof at a later time. In the event
that SCEA reasonably believes that the Wholesale Price provided by Publisher
with respect to any Licensed Product is not accurate, SCEA shall be entitled to
request additional documentation from Publisher to support the listed Wholesale
Price for such Licensed Product. In addition, during the Term and for a period
of two (2) years thereafter upon the giving of reasonable written notice to
Publisher, representatives of SCEA shall have access to, and the right to make
copies and summaries of, such portions of all of Publisher's books and records
as pertain to the Licensed Products and any payments due or credits received
hereunder. In the event that such inspection reveals an under-reporting of any
payment due to SCEA, Publisher shall immediately pay SCEA such amount. In the
event that any audit conducted by SCEA reveals that Publisher has under-reported
any payment due to SCEA hereunder by five percent (5%) or more for that audit
period, then in addition to the payment of the appropriate amount due to SCEA
* Confidential portion omitted and filed separately with the Commission.
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Publisher shall reimburse SCEA for all reasonable audit costs for that audit
and any and all collection costs to recover the unpaid amount.
8. Effective upon execution hereof, Exhibit A, Section C is hereby
amended and restated in its entirety to read as follows:
3. The Hit Title Rebate may not be used in connection with any royalty
reduction program of SCEA 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 or on Licensed
Products that qualify for the [*].
9. Except as specifically amended hereby, the LPA shall remain in full force
and effect and is hereby ratified and confirmed in all respects. This Amendment
shall be governed by and construed in accordance with the laws of the State of
California.
SONY COMPUTER ENTERTAINMENT BAY AREA MULTIMEDIA
AMERICA INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇ ▇▇▇▇▇
Vice President Title: President
Third Party Relations and Date: 2-25-00
Research and Development
July 28, 2000
NOT A VALID AGREEMENT UNTIL BOTH PARTIES
EXECUTED BY BOTH PARTIES
* Confidential portion omitted and filed separately with the Commission.
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