EXHIBIT 10.24
Confidential Portions Omitted
SONY PLAYSTATION(TM) LICENSE AGREEMENT
THIS LICENSE AGREEMENT is entered into as of the 16th day of February, 1995, by
and between SONY COMPUTER ENTERTAINMENT OF AMERICA, a division of Sony
Electronic Publishing Company, with offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (hereinafter "Sony"), and Interplay Productions, with offices at
00000 Xxxxx Xxxxxx, Xxxxxx, XX 00000 (hereinafter "Licensee").
WHEREAS, Sony and/or its affiliates have developed a CD-based interactive
console for playing video games and for other entertainment purposes known as
PlayStation(TM) (formerly known under the development code name "PS-X")
(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, Licensee desires to be granted a non-exclusive license to develop and
distribute Licensed Products (as defined below) pursuant to the terms and
conditions set forth in this Agreement.
WHEREAS, Sony is willing, on the terms and subject to the conditions of this
Agreement, to grant Licensee the desired non-exclusive license to develop and
distribute Licensed Products, and desires to manufacture such Licensed Products
for Licensee.
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, Licensee and Sony
hereby agree as follows:
1. DEFINITION OF TERMS.
1.1 "Executable Software" means Licensee's object code software which
includes the Licensee Software and any software (whether in object code or
source code form) provided by Sony which is intended to be combined with
Licensee Software for execution on a Player and has the ability to communicate
with the software resident in the Player.
1.2 "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, 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.
1.3 "Licensed Territory" means the countries listed in Exhibit A, as may
be in effect from time to time.
1.4 "Licensed Products" shall mean the Executable Software embodied on CD-
ROM media.
1.5 "Licensed Trademarks" means the trademarks, service marks and logos
designated by Sony. Nothing contained in this Agreement shall in any way grant
Licensee the right to use the trademark "Sony" in any manner as a trademark,
trade name, service xxxx or logo other than as expressly permitted by Sony.
Sony may amend such Licensed Trademarks upon reasonable notice to Licensee.
1.6 "Licensee Software" means Licensee's application object code and data
(including audio and video material) developed by Licensee in accordance with
this Agreement, which, when linked to any software provided by Sony, create
Executable Software.
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1.7 "Packaging" means, with respect to each Licensed Product, the carton,
containers, packaging and wrapping materials (but excluding instructional
manuals, liners or other user information for such Licensed Product to be
inserted in the jewel case).
1.8 "Sony Materials" means any data, object code, source code,
documentation, and hardware provided or supplied to Licensee by Sony, including,
without limitation, any portion or portions of the development tools.
2. LICENSE GRANT.
Sony hereby grants to Licensee, and Licensee hereby accepts, for the term
of this Agreement, within the Licensed Territory, under Sony's Intellectual
Property Rights, including without limitation any relevant patents Sony may own
or have acquired by license, a non-exclusive, nontransferable license, without
the right to sublicense (except as specifically provided herein): (i) to use
the object code version of any software supplied by Sony that is intended to be
combined with Licensee Software and executed on a Player internally as may
reasonably be necessary to develop Licensed Products; (ii) to reproduce and
distribute executable files for execution on a Player incorporating such
software in accordance with the provisions of this License Agreement, including
without limitation, Section 7; (iii) to market, distribute and sell such
Licensed Products; (iv) to use the Licensed Trademarks in connection with the
packaging, advertising and promotion of the Licensed Products; and (v) to
sublicense to end users the right to use the Licensed Products for non-
commercial purposes only and not for public performance.
3. DEVELOPMENT TOOLS.
After execution of this Agreement, Sony will provide to Licensee the
hardware and software development tools which Sony deems to be necessary for
development of the Executable Software pursuant to an agreement to be entered
into separately between the parties hereto.
4. LIMITATIONS ON LICENSES; RESERVATION OF RIGHTS.
4.1 REVERSE ENGINEERING PROHIBITED. Licensee hereby agrees not to
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disassemble, peel semiconductor components, decompile, or otherwise reverse
engineer 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 the Licensee Software), or permit or encourage any
third party to do so, or use or acquire any materials from any third party who
does so. Licensee 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
License Agreement. Licensee shall be required in all cases to pay royalties in
accordance with Section 9 hereto to Sony on any of Licensee's products utilizing
Sony Materials or which are in any way derived from the disassembly,
decompilation, reverse engineering of, or use of source code derived from, the
Sony Materials.
4.2 RESERVATION OF SONY'S RIGHTS. The licenses granted in this License
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Agreement extend only to development of Licensed Products for use on the Player,
in such format as may be designated by Sony. Without limiting the generality of
the foregoing, Licensee shall not have the right to distribute or transmit the
Executable Software or the Licensed Products via electronic means or any other
means now known or hereafter devised, including without limitation, via
wireless, cable, fiber optic means, telephone lines, microwave and/or radio
waves, or over a network of interconnected computers or other devices; provided,
however, that Licensee may distribute the Licensed Software in its discretion so
long as it does not contain any Sony Materials or Licensed Trademarks. This
License Agreement does not grant any right or license, under any Intellectual
Property Rights of Sony 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 License Agreement or the conduct of the parties hereunder. Licensee shall
not make use of any of the Sony Materials and Player or any Intellectual
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Property Rights related to the Sony Materials and Player (or any portion
thereof) except as authorized by and in compliance with the provisions of this
License Agreement or as may be otherwise expressly authorized in writing by
Sony. No right, license or privilege has been granted to Licensee 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.
4.3 RESERVATION OF LICENSEE'S RIGHTS. Licensee retains all rights, title
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and interest in and to the Licensee Software, including without limitation,
Licensee's Intellectual Property Rights therein, and nothing in this Agreement
shall be construed to restrict the right of Licensee to develop products
incorporating the Licensee Software (separate and apart from the Sony Materials)
for any hardware platform or service other than the Player.
5. QUALITY STANDARDS FOR THE LICENSED PRODUCTS.
5.1 QUALITY ASSURANCE OF PRODUCT PROPOSAL. The Licensed Products,
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including, without limitation, the contents and title of each of the Licensed
Products, and/or Licensee's use of any of the Licensed Trademarks, shall be
subject to Sony's prior written approval, which shall be within Sony's sole
discretion as to acceptable standards of quality. Before Licensee commences
programming of the Licensee Software for each of the Licensed Products, Licensee
shall submit to Sony, for Sony's written approval or disapproval, which shall
not be unreasonably withheld or delayed, a written proposal (the "Product
Proposal") [*]. In the event that Sony rejects such Product Proposal, Sony
shall have the right in its sole discretion to request Licensee to make
revisions or modifications to such proposal, and any such changes shall be made
at Licensee's cost. Licensee shall notify Sony promptly in writing in the event
of any material proposed change in any portion of the Product Proposal and
shall, from time to time at the request of Sony for quality assurance purposes,
submit work-in-progress on the Licensed Product during the development process,
in a medium designated by Sony, for Sony's approval. Sony agrees to be
reasonable with respect to work-in-progress submissions. Sony shall have the
right, from time-to-time with appropriate notice to Licensee, to limit the
number of proposed Licensed Products that Licensee may submit to Sony for review
and approval or disapproval, during any [*] period following the effective date
of this Agreement. [*] Licensee agrees that all Licensed Products will be
designed (if an original title for the Player) or modified (if a pre-existing
title) to substantially utilize the particular capabilities of the Sony
Materials and the Player, as may be described in the Product Proposal relating
to that Licensed Product.
5.2 APPROVAL OF EXECUTABLE SOFTWARE. Following Sony's written approval of
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the Product Proposal, Licensee shall on or before the date specified in the
Product Proposal, deliver to Sony for its inspection and evaluation, a prototype
of the Executable Software for the proposed Licensed Product. Such prototype
shall be in the format prescribed by Sony. Sony will evaluate such prototype
Executable Software and notify Licensee 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, Sony shall
specify the reasons for such disapproval in writing and state what corrections
and/or improvements are necessary. After making the necessary corrections
and/or improvements, Licensee may submit a new prototype for approval or
disapproval by Sony. No approval by Sony of 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
Sony's rights under this Agreement.
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5.3 APPROVAL OF PACKAGING AND ARTWORK. For each proposed Licensed
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Product, Licensee shall be responsible, at Licensee's expense, for developing
all artwork and mechanicals ("Artwork") set forth on the Packaging, and all
instructional manuals, liners and other user materials ("Inserts") inserted into
the jewel box (Artwork and Inserts herein collectively referred to as "Printed
Materials"). All Printed Materials shall comply with the requirements of the
Sony Guidelines (hereinafter "Guidelines") to be provided to Licensee subsequent
to the execution of this License Agreement, and as may be amended from time to
time by Sony. At the time prototype Executable Software for a proposed Licensed
Product is submitted to Sony for inspection and evaluation, Licensee shall also
deliver to Sony, 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. Licensee agrees that the quality of such Printed
Materials shall be of the same quality as that associated with high quality
consumer products. Sony shall promptly evaluate any and all proposed Printed
Materials submitted to Sony by Licensee, and shall use reasonable efforts to
approve or disapprove any such submitted Printed Materials [*]. If any of the
Printed Materials are disapproved, Sony shall specify the reasons for such
disapproval and state what corrections are necessary. After making the necessary
corrections to the disapproved Printed Materials, Licensee may submit new
proposed Printed Materials for approval by Sony. Sony shall not unreasonably
withhold its approval of the proposed Printed Materials submitted for review by
Licensee. No approval by Sony 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 be deemed to constitute a waiver of any of Sony's rights under
this Agreement.
5.4 ADVERTISING MATERIALS. Pre-production samples of the advertising,
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merchandising, promotional, and display materials of or concerning the Licensed
Products (collectively referred to hereinafter as the "Advertising Materials")
shall be submitted by Licensee to Sony, free of cost, for Sony's evaluation and
approval as to quality, style, appearance, usage of any of the Licensed
Trademarks, and appropriate reference of the notices, prior to any actual
production, use, or distribution of any such items by Licensee or in its behalf.
No such proposed Advertising Materials shall be produced, used, or distributed
directly or indirectly by Licensee without first obtaining the written approval
of Sony. Sony shall promptly evaluate any and all Advertising Materials
submitted to Sony by Licensee, and shall use reasonable efforts to approve or
disapprove any such submitted Advertising Materials [*]. Subject in each
instance to the prior written approval of Sony, Licensee may use such textual
and/or pictorial advertising matter (if any) as may be created by Sony or in its
behalf pertaining to the Sony Materials and/or to the Licensed Trademarks on
such promotional and advertising materials as may, in Licensee's judgment,
promote the sale of the Licensed Products within the Licensed Territory. Sony
shall have the right to use the Licensed Products in any advertising or
promotion for Player at Sony's expense, subject to giving Licensee reasonable
prior notice of such advertisement or promotion. Sony shall confer with Licensee
regarding the text of any such advertisement. If required by Sony and/or any
governmental entity, Licensee shall include, at Licensee's cost and expense, the
required consumer advisory rating code(s) on any and all marketing and
advertising materials used in connection with the Licensed Product, which shall
be procured in accordance with the provisions of Section 6 below.
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 to be provided to Licensee subsequent to the execution of this
License Agreement, which template may be amended from time to time by Sony
during the term of this License Agreement. Licensee agrees that, if required by
Sony or any governmental entity, it shall submit each Licensed Product to a
consumer advisory ratings system designated by Sony 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 Licensee. Any required consumer advisory
rating code(s) procured hereby shall be displayed on the Licensed Product and
the associated Printed Materials in accordance with the Guidelines, at
Licensee's cost and expense.
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7. MANUFACTURE OF THE LICENSED PRODUCTS.
7.1 MANUFACTURE BY SONY.
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7.1.1 APPOINTMENT OF SONY [ * ]. Licensee hereby appoints Sony,
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and Sony hereby accepts such appointment, as the [*] manufacturer of all units
of the Licensed Products. Licensee acknowledges and agrees that it shall
purchase from Sony [*] percent of its requirements for finished units of the
Licensed Products and Inserts for such Licensed Products, subject to Section
7.1.3 below, during the term of the Agreement. Sony shall provide to Licensee
written specifications setting forth terms relating to the manufacturing of
Licensed Products and their component parts ("Specifications") subsequent to
execution of this Agreement, which may be amended from time to time upon
reasonable notice to Licensee. Sony shall have the right, but no obligation, to
subcontract any phase of production of any or all of the Licensed Products or
any part thereof.
7.1.2 CREATION OF MASTER CD-ROM. Following approval by Sony of
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each Licensed Product pursuant to Section 5.2, Licensee shall provide Sony with
two (2) copies (in the form of CD write-once discs or such other form as may be
requested by Sony in the Specifications) of the pre-production Executable
Software for the original master CD-ROM (the "Master CD-ROM") from which all
other copies of the Licensed Product are to be replicated. Promptly following
such receipt of such samples, Sony shall create the Master CD-ROM from one (1)
such sample of the pre-production Executable Software in compliance with
specifications effective at the time of replication. The price for mastering
shall be based on the market price for mastering CD-ROM discs, plus costs
necessary to protect Sony's Intellectual Property Rights in the Sony Materials
and the Player. Licensee shall be responsible for the costs, as set forth in the
Specifications, of creating such Master CD-ROM. In order to insure against loss
or damage to the copies of the Executable Software furnished to Sony, Licensee
will retain duplicates of all such Executable Software. Sony shall not be liable
for loss of or damage to any copies of the Executable Software.
7.1.3 DELIVERY OF PRINTED MATERIALS. Licensee shall deliver the
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film for all Printed Materials to Sony or at Sony's option to Sony's designated
manufacturing facility in accordance with the Specifications, at Licensee's sole
risk and expense. In the event that Licensee elects to be responsible for
manufacturing the Printed Materials, Licensee shall deliver such Printed
Materials, in the minimum order quantities set forth in Section 7.2.2 below.
7.1.4 MANUFACTURE OF UNITS. Upon approval, pursuant to Section 5,
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of such pre-production samples of the Executable Software for the Master CD-ROM
and the associated Artwork, Sony will, in accordance with the terms and
conditions set forth in this Section 7, and at Licensee's expense (a)
manufacture units of the Licensed Product for Licensee; (b) manufacture
Licensee's Packaging and Inserts (subject to Licensee's right to manufacture its
own Printed Materials at Licensee's sole cost and expense); and (C) package the
CD-ROMs with the Printed Materials.
7.2 PRICE, PAYMENT AND TERMS.
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7.2.1 PRICE. The applicable price for manufacture of any units of
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the Licensed Products ordered hereunder shall be determined by Sony and provided
to Licensee in the Specifications prior to manufacture of the Licensed Products.
Such price shall be based on [*] (subject to Section 7.1.4 above), [*] provided
by Sony [*]. Purchase price(s) shall be stated in United States dollars and are
subject to change by Sony at any time upon reasonable notice to Licensee;
provided, however, the applicable price shall not be changed with respect to any
units of the Licensed Products which are the subject of an effective purchase
order but which have not yet been delivered by Sony at the designated F.O.B.
point. Prices
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for the finished units of the 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 Sony may be required to collect
or pay as a consequence of the sale or delivery of any units of the Licensed
Products to Licensee. Licensee 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. Licensee shall issue to Sony written purchase
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order(s) in accordance with the Specifications. Such orders shall reference this
Agreement, give Licensee authorization number, specify quantities by Licensed
Product, state requested delivery date and all packaging information and be
submitted on or with an order form to be provided in the Specifications.
Licensee acknowledges that Sony may impose lead times (a) with respect to
initial orders, of [*] from the date on which Sony receives all materials
necessary to complete the manufacturing of Licensed Products pursuant to this
Section 7 and the Specifications referred to herein, and (b) with respect to
reorders, [*] provided that Sony has in inventory additional Printed
Materials in anticipation of reorders as set forth in this Section. All purchase
orders shall be subject to acceptance by Sony. Licensee shall issue to Sony, for
each of the Licensed Products approved by Sony pursuant to Section 5.1, a non-
cancelable Purchase Order for at least [*] units of such Licensed Product. In
the event that Sony manufactures the Printed Materials for the Licensee pursuant
to Section 7.1.3 above, Licensee may, at Licensee's option, allow Sony to
purchase an additional 20% of such Printed Materials at Licensee's expense in
anticipation of reorders. Licensee agrees that such Printed Materials will be
stored by Sony for a period of no more than ninety (90) days. Licensee may order
additional units of any of such Licensed Products in the minimum reorder
quantity of [*] units per order, provided that reorder quantities may be less
than [*] units per order (but in no event less than [*] units per order), in
Sony's sole discretion, in the event that either (i) Sony has additional
quantities of Printed Materials in stock with respect to any such Licensed
Product, or (ii) Licensee agrees to provide its own Printed Materials in
accordance with Section 7.1.3 above. Licensee 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 reached mutual agreement as to
Licensee'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. Orders will be invoiced upon shipment, and
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will include royalties payable pursuant to Section 9 hereto. Each invoice will
be paid within [*] days of the date of the invoice. No other deduction may be
made from remittances unless an approved credit memo has been issued by Sony. No
claim for credit due to shortage or breakage will be allowed unless it is made
within seven (7) days from the date of shipment. Each shipment of Licensed
Products to Licensee shall constitute a separate sale obligating Licensee to pay
therefore, whether said shipment be whole or partial fulfillment of any order.
All sums owed or otherwise payable to Sony 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, 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. Licensee shall be additionally liable for all of Sony's costs and
expenses of collection, including, without limitation, reasonable fees for
attorneys and court costs. Notwithstanding the foregoing, such specified rate of
interest shall not excuse or be construed as a waiver of Licensee's obligation
to timely provide any and all payments owed to Sony hereunder.
7.3 DELIVERY OF LICENSED PRODUCTS. Sony shall have no obligation to store
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completed units of Licensed Products. Delivery of Licensed Products shall be in
accordance with the Specifications. Title, risk of loss, or damage in transit
to any and all Licensed Products manufactured by Sony pursuant to Licensee's
orders shall vest in Licensee immediately upon delivery to the carrier.
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7.4 TECHNOLOGY EXCHANGE AND QUALITY ASSURANCE. There will be no
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technology exchange between Sony and Licensee under this Agreement. Due to the
proprietary nature of the mastering process, Sony will not under any
circumstances release any master discs or other in-process materials to the
Licensee. All such physical master discs, stampers, etc. shall be and remain the
sole property of Sony.
7.5 INSPECTION AND ACCEPTANCE. Licensee may inspect and test any units of
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the Licensed Products at Licensee's receiving destination. Any finished units
of the Licensed Products which fail to conform to the Specifications and/or any
descriptions contained in this Agreement may be rejected by Licensee by
providing written notice thereof to Sony within thirty (30) days of receipt of
such units of the Licensed Products at Licensee's receiving destination. In
such event, the provisions of Section 11.4 regarding Sony's warranty of the
units shall apply with respect to any such rejected units of the Licensed
Products. Subject to the provisions of Section 11.4.1 hereto, if Licensee fails
to properly reject any units of the Licensed Products within such thirty (30)
day period, such Licensed Product units shall be deemed accepted by Licensee and
may not be subsequently rejected.
8. MARKETING AND DISTRIBUTION.
In accordance with the provisions of this License Agreement, Licensee
shall, at no expense to Sony, diligently market, sell and distribute the
Licensed Products, and shall use its reasonable best efforts to stimulate demand
for such Licensed Products in the Licensed Territory and to supply any resulting
demand. Licensee 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. Subject to availability, Licensee shall sell to Sony
quantities of the Licensed Products at as low a price and on terms as favorable
as Licensee sells similar quantities of the Licensed Products to the general
trade; provided, however, Sony shall not directly or indirectly resell any such
units of the Licensed Products within the Licensed Territory without Licensee's
prior written consent.
9. ROYALTIES.
Licensee shall pay Sony a per unit royalty in United States dollars, as set
forth on Exhibit B hereto, for each unit of the Licensed Products manufactured.
Payment of such royalties shall be made to Sony in conjunction with the payment
to Sony 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 Sony hereunder. [*] Similarly, there
shall be no deduction from the royalties otherwise owed to Sony hereunder as a
result of any uncollectible accounts owed to Licensee, or for any credits,
discounts, allowances or returns which Licensee may credit or otherwise grant to
any third party customer of any units of the Licensed Products, or for any
taxes, fees, assessments, or expenses of any kind which may be incurred by
Licensee 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 Sony hereunder,
Licensee shall be solely responsible for and bear any cost relating to any
withholding taxes and/or other such assessments which may
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provide Sony 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 SONY. Sony represents and warrants
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solely for the benefit of Licensee that Sony has the right, power and authority
to enter into this License Agreement and to fully perform its obligations
hereunder.
10.2 REPRESENTATIONS AND WARRANTIES OF LICENSEE. Licensee represents and
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warrants that: (i) there is no threatened or pending action, suit, claim or
proceeding alleging that the use by Licensee of all or any part of the Licensee
Software 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 Licensee in or to the Licensee Software or any
underlying work or content embodied therein, or any name, designation or
trademark used in conjunction with the Licensed Products; (ii) Licensee has the
right, power and authority to enter into this License Agreement and to fully
perform its obligations hereunder; (iii) the making of this License Agreement by
Licensee does not violate any separate agreement, rights or obligations existing
between Licensee and any other person or entity, and, throughout the term of
this License Agreement, Licensee shall not make any separate agreement with any
person or entity that is inconsistent with any of the provisions of this License
Agreement; (iv) Licensee shall not make any representation or give any warranty
to any person or entity expressly or impliedly on Sony's behalf, or to the
effect that the Licensed Products are connected in any way with Sony (other than
that the Licensed Products have been developed, marketed, manufactured, sold,
and/or distributed under license from Sony), (v) the Executable Software shall
be distributed by Licensee solely in object code form; (vi) each of the Licensed
Products shall be marketed, sold, and distributed in an ethical manner and in
accordance with all applicable laws and regulations; and (vii) Licensee'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 Sony.
11. INDEMNITIES; LIMITED LIABILITY.
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11.1 INDEMNIFICATION BY SONY. Sony shall indemnify and hold Licensee
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harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim which result from or are in
connection with a breach of any of the representations or warranties provided by
Sony herein; provided, however, that Licensee shall give prompt written notice
to Sony of the assertion of any such claim, and provided, further, that Sony
shall have the right to select counsel and control the defense and/or settlement
thereof, subject to the right of Licensee to participate in any such action or
proceeding at its own expense with counsel of its own choosing. Sony 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 Sony. Licensee agrees to provide Sony, at no
expense to Licensee, reasonable assistance and cooperation concerning any such
matter; and Licensee shall not agree to the settlement of any such claim, action
or proceeding without Sony's prior written consent.
11.2 INDEMNIFICATION BY LICENSEE. Licensee shall indemnify and hold Sony
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harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim, which result from or are in
connection with (i) a breach of any of the representations or warranties
provided by Licensee herein, including without limitation claims resulting from
Licensee's failure to timely pay, any withholding taxes or other assessments as
set forth in Section 9
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hereto or any breach of Licensee's confidentiality obligations as set forth in
Section 14 hereto; or (ii) any claim of infringement or alleged infringement of
any third party's Intellectual Property Rights with respect to the Licensee
Software; or (iii) any claims of or in connection with any bodily injury
(including death) or property damage, by whomsoever such claim is made, arising
out of, in whole or in part, the sale, and/or use of any of the Licensed
Products manufactured by Sony hereunder, unless due to the negligence of Sony in
performing any of the specific duties and/or providing any of the specific
manufacturing services required of it hereunder; provided, however, that Sony
shall give prompt written notice to Licensee of the assertion of any such claim,
and provided, further, that Licensee shall have the right to select counsel and
control the defense and/or settlement thereof, subject to the right of Sony to
participate in any such action or proceeding at its own expense with counsel of
its own choosing. Licensee 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 Licensee.
Sony shall provide Licensee, at no expense to Sony, reasonable assistance and
cooperation concerning any such matter. If Sony is joined as a party to any
lawsuit initiated by or against Licensee, Licensee shall indemnify and hold Sony
harmless from and against all claims, losses, liabilities, damages, expenses and
costs, including, without limitation, reasonable fees for attorneys and court
costs, incurred in connection with any such lawsuit. Sony shall not agree to the
settlement of any such claim, action or proceeding without Licensee's prior
written consent.
11.3 LIMITATION OF LIABILITY; LICENSEE'S OBLIGATIONS.
-----------------------------------------------
11.3.1 LIMITATION OF SONY'S LIABILITY. IN NO EVENT SHALL SONY OR
------------------------------
ITS AFFILIATES, SUPPLIERS OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE FOR
PROSPECTIVE PROFITS, OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE
BREACH OF THIS AGREEMENT BY SONY, THE MANUFACTURE OF THE LICENSED PRODUCTS AND
THE USE OF THE LICENSED PRODUCTS BY LICENSEE OR ANY END-USER, WHETHER UNDER
THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR
OTHERWISE. IT IS THE RESPONSIBILITY OF LICENSEE TO REVIEW THE ACCURACY OF THE
DATA ON THE UNITS MANUFACTURED BY SONY FOR LICENSEE. IN NO EVENT SHALL SONY'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 LICENSEE TO SONY UNDER THIS AGREEMENT. EXCEPT AS
EXPRESSLY SET FORTH HEREIN, NEITHER SONY, 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 LICENSEE OR TO ANY THIRD
PARTIES WITH RESPECT TO THE QUALITY AND/OR PERFORMANCE OF ANY PORTION OF THE
SONY MATERIALS OR THE LICENSED PRODUCTS, INCLUDING, WITHOUT LIMITATION, THE
OPERATION OR PERFORMANCE OF ANY OF THE LICENSED PRODUCTS.
11.3.2 LIMITATION OF LICENSEE'S LIABILITY. IN NO EVENT SHALL
----------------------------------
LICENSEE BE LIABLE TO SONY FOR ANY PROSPECTIVE PROFITS, OR SPECIAL, 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 OF ANY OBJECT CODE PROVIDED BY SONY, IN WHOLE OR IN PART, OR ANY
LICENSEE SOFTWARE BY LICENSEE OR ANY THIRD PARTY, WHETHER UNDER THEORY OF
CONTRACT, TORT (INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR
OTHERWISE, PROVIDED THAT LICENSEE EXPRESSLY AGREES THAT SUCH LIMITATIONS SHALL
NOT APPLY TO DAMAGES RESULTING FROM LICENSEE'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 LICENSEE MAY BE REQUIRED TO PAY TO THIRD PARTIES
UNDER SECTIONS 11.2 OR 17.9.
9
11.3.3 LICENSEE'S OBLIGATIONS. If at any time or times subsequent
----------------------
to the approval of the Executable Software pursuant to Section 5.2, Sony
identifies any material bugs with respect to the Licensed Product or any bugs
are brought to the attention of Sony, Licensee shall, at no cost to Sony,
promptly correct any such bugs, to Sony's reasonable satisfaction. In the event
any units of any of the Licensed Products create any risk of loss or damage to
any property or injury to any person, Licensee shall immediately take effective
steps, at Licensee's sole liability and expense, to recall and/or to remove such
defective product units from any affected channels of distribution. Licensee
shall provide all end-user support for the Licensed Products.
11.4 WARRANTIES; DISCLAIMER OF WARRANTIES.
------------------------------------
11.4.1 MANUFACTURING WARRANTY. Sony warrants that the units that
are manufactured by Sony for Licensee pursuant to Section 7 of this Agreement
shall, at time of delivery to Licensee, be [*]. The sole obligation of Sony
under this warranty shall be, for a period of [*] the date of shipment of such
discs by Sony to Licensee, at Sony's election, either to replace, to issue
credit, or to refund to Licensee the purchase price paid to Sony for any such
[*]. Such warranty is the only warranty applicable to the Licensed Product
manufactured by Sony for Licensee pursuant to Section 7 of this Agreement. This
warranty shall not apply to damage resulting from accident, alteration,
negligence or misuse of the Licensed Products. If, during the aforesaid period,
a [*] is received by Licensee, Licensee shall notify Sony and, upon request by
Sony, provide Sony with the returned disc(s) and a written description of the
[*]. Sony shall not accept the return of any disc(s) except [*] (i.e., those
discs that are not [*], and all such returns must be authorized by Sony in
writing and in advance. All discs for which return is authorized will be sent to
a place designated by Sony at Sony's expense. If the defect did not arise from
causes placing liability on Sony under the above warranty, Licensee shall
reimburse Sony for expenses incurred in shipping, processing and analyzing the
discs. Sony's judgment as to the [*] shall be final and binding.
11.4.2 DISCLAIMER OF WARRANTY. EXCEPT AS OTHERWISE EXPRESSLY SET
----------------------
FORTH ABOVE, NEITHER SONY NOR ITS AFFILIATES AND SUPPLIERS MAKE, NOR DOES
LICENSEE RECEIVE, ANY WARRANTIES, EXPRESS, IMPLIED OR STATUTORY REGARDING THE
SONY MATERIALS AND THE PLAYER AND/OR THE UNITS OF THE LICENSED PRODUCTS
MANUFACTURED HEREUNDER. SONY SHALL NOT BE LIABLE FOR ANY INJURY, LOSS OR DAMAGE,
DIRECT OR CONSEQUENTIAL, ARISING OUT OF THE USE OR INABILITY TO USE THE UNITS.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SONY 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 AND THE PLAYER AND/OR THE UNITS
MANUFACTURED HEREUNDER. 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 LICENSEE RIGHTS. The copyrights with respect to the Licensee
---------------
Software (exclusive of the rights licensed from Sony hereunder) and any names or
other designations used as titles for the Licensed Products are and shall be the
exclusive property of Licensee or of any third party from which Licensee has
been granted the license and related rights to develop and otherwise exploit any
such Licensee Software or any such names or other designations.
____________
[*] Confidential Portions Omitted and Filed Separately with the Commission.
10
12.2 SONY RIGHTS.
-----------
12.2.1 LICENSED TRADEMARKS. The Licensed Trademarks and the
-------------------
goodwill associated therewith are and shall be the exclusive property of Sony.
Nothing herein shall give Licensee 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 License Agreement. Licensee shall not do
or cause to be done any act or thing contesting or in any way impairing or
tending to impair any of Sony's rights, title, or interests in or to any of the
Licensed Trademarks, nor shall Licensee register any trademark in its own name
or in the name of any other person or entity which is similar to or is likely to
be confused with any of the Licensed Trademarks.
12.2.2 LICENSE OF SONY MATERIALS AND PLAYER. Subject to the rights
------------------------------------
granted by Sony to Licensee hereunder, all rights with respect to the Sony
Materials and Player, including, without limitation, all of Sony's Intellectual
Property Rights therein, are and shall be the exclusive property of Sony.
Nothing herein shall give Licensee any right, title or interest in or to the
Sony Materials or the Player (or any portion thereof), other than the non-
exclusive license and privilege during the term hereof to use the Sony Materials
and Player for the development of the Executable Software solely in accordance
with the provisions of this License Agreement. Licensee shall not do or cause
to be done any act or thing contesting or in any way impairing or tending to
impair any of Sony's rights, title, and/or interests in or to the Sony Materials
or the Player (or any portion thereof).
12.3 EFFECT OF TERMINATION. Upon the expiration or earlier termination of
---------------------
this License Agreement for any reason, Licensee shall immediately cease and
desist from any further use of the Licensed Trademarks and Sony Materials
licensed hereunder, subject to the provisions of Section 16.3, below.
13. COPYRIGHT, TRADEMARK AND TRADE SECRET PROTECTION.
In the event that either Licensee or Sony discovers or otherwise becomes
aware that any of the Intellectual Property Rights of the other embodied in any
of the Licensed Products 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.
14. CONFIDENTIALITY.
14.1 NONDISCLOSURE AGREEMENT. Licensee hereby acknowledges that the
-----------------------
Nondisclosure Agreement dated December 14, 1993 between Sony and Licensee
("Nondisclosure Agreement") will remain in full force and effect with respect to
the Confidential Information of Sony throughout the term of this Agreement. In
the event of any conflict or inconsistency between the provisions of the
Nondisclosure Agreement and the provisions of this Section 14, the provisions of
the Nondisclosure Agreement shall control with respect to the Confidential
Information of Sony.
14.2 CONFIDENTIAL INFORMATION. For the purposes of this License Agreement,
------------------------
"Confidential Information" of Sony means (i) the Sony Materials and information
regarding Sony'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), and (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 Sony to
Licensee. "Confidential Information" of Licensee shall mean the Licensee
Software as provided to Sony pursuant to this License Agreement and all
documentation and information relating thereto that is disclosed in writing or
in any other form by Licensee to Sony if the information is designated as (or is
provided under circumstances indicating the information is) confidential or
proprietary.
11
14.3 PRESERVATION OF CONFIDENTIALITY; NON-DISCLOSURE. Each party
-----------------------------------------------
("receiving party") shall hold all Confidential Information of the other party
("disclosing party") in trust and in strict confidence for the sole benefit of
the disclosing party and for the exercise of the limited rights expressly
granted to the receiving party under this License Agreement. The receiving
party shall take all steps necessary to preserve the confidentiality of the
Confidential Information of the disclosing party, 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 the receiving party takes to protect the confidentiality of its
own most highly confidential information. Except as may be expressly authorized
by the disclosing party in writing, the receiving party shall not at any time,
either before or after any termination of this License Agreement, directly or
indirectly: (i) disclose any Confidential Information to any person other than
an employee or subcontractor of the receiving party who needs to know or have
access to such Confidential Information for the purposes of this License
Agreement, and only to the extent necessary for such purposes (and with respect
to any subcontractor, only in accordance with Section 17.5 below); (ii) except
as otherwise provided in this License Agreement, duplicate the Confidential
Information for any purpose whatsoever; (iii) use the Confidential Information
for any reason or purpose other than as expressly permitted in this License
Agreement; or (iv) remove any copyright notice, trademark notice and/or other
proprietary legend set forth on or contained within any of the Confidential
Information.
14.4 OBLIGATIONS UPON UNAUTHORIZED DISCLOSURE.
----------------------------------------
14.4.1 NOTICE TO DISCLOSING PARTY. If at any time the receiving
--------------------------
party becomes aware of any unauthorized duplication, access, use, possession or
knowledge of any Confidential Information, the receiving party shall immediately
notify the disclosing party. The receiving party shall provide any and all
reasonable assistance to the disclosing party to protect the disclosing party's
proprietary rights in any Confidential Information that the receiving party 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
License 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 (and all related costs), costs and expenses incurred by the
disclosing party to protect its proprietary rights in the Confidential
Information. The receiving party shall take all reasonable steps requested by
the disclosing party to prevent the recurrence of any unauthorized duplication,
access, use, possession or knowledge of the Confidential Information.
14.4.2 ACCOUNTING, ETC. If Licensee violates or fails to comply
---------------
with any of the terms or conditions of this Section 14 or Section 4 hereto, Sony
shall be entitled to an accounting and repayment of all forms of compensation,
commissions, remuneration or benefits which Licensee directly or indirectly
realizes as a result of or in connection with any such violation or failure to
comply. Such remedy shall be in addition to and not in limitation of any
injunctive relief or other remedies to which Sony may be entitled under this
Agreement or otherwise, at law or in equity.
14.5 EXCEPTIONS. The foregoing restrictions will not apply to information
----------
to the extent that the receiving party can demonstrate such information: (i)
was known to the receiving party at the time of disclosure to the receiving
party by the disclosing party as shown by the files of the receiving party in
existence at the time of disclosure; (ii) becomes part of information in the
public domain through no fault of the receiving party; (iii) has been rightfully
received from a third party authorized by the disclosing party to make such
disclosure without restriction; (iv) has been approved for release by prior
written authorization of the disclosing party; 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 the receiving party has notified the disclosing party immediately
upon learning of the possibility of any such court order or legal requirement
and has given the disclosing party a reasonable opportunity (and cooperated with
the disclosing party) to contest or limit the scope of such required disclosure
(including application for a protective order). Information shall not be deemed
known to the receiving party or publicly
12
known for purposes of the above exceptions (A) merely because it is embraced by
more general information in the prior possession of the receiving party or
others, or (B) merely because it is expressed in public material in general
terms not specifically the same as Confidential Information.
14.6 CONFIDENTIALITY OF AGREEMENT. The terms and conditions of this
----------------------------
License Agreement shall be treated as Confidential Information; provided that
each party may disclose the terms and conditions of this License 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 License Agreement or rights under this License Agreement.
Both parties shall treat the fact that the parties have entered into this
License Agreement as Confidential Information until a public announcement
regarding this License Agreement is released by Sony, at its sole discretion,
announcing that Licensee has become a Licensee under this License Agreement.
15. TERM AND TERMINATION.
15.1 EFFECTIVE DATE; TERM. This License 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 initial term of this License Agreement shall be for four (4) years
from the Effective Date.
15.2 TERMINATION BY SONY. Sony shall have the right to terminate this
-------------------
License Agreement immediately, by providing written notice of such election to
Licensee, upon the occurrence of any of the following events or circumstances:
(i) If Licensee breaches any of its material obligations provided for in this
License Agreement, including, but not limited to, a failure to pay any amount
due hereunder, and such breach is not corrected or cured within thirty (30) days
after receipt of written notice of such breach; (ii) Licensee'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; or (iii) Licensee'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 Licensee's property, whether tangible or intangible,
wherever located; or (iv) The making by Licensee of a general assignment for the
benefit of creditors; or (v) The commencing by Licensee or Licensee's intention
to commence a voluntary case under any applicable bankruptcy laws (as now or
hereafter may be in effect); or (vi) The adjudication that Licensee is a
bankrupt or insolvent; or (vii) The filing by Licensee or the intent to file by
Licensee of a petition seeking to take advantage of any other law providing for
the relief of debtors; or (viii) Licensee'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; or (ix)
If control of more than [*] of the ownership of Licensee or substantially all
of Licensee's assets are transferred to any person or entity [*].
15.3 PRODUCT-BY-PRODUCT TERMINATION BY SONY. In addition to the events of
--------------------------------------
termination described in Section 15.2, above, Sony, at its option, shall be
entitled to terminate, on a product-by-product basis, the licenses and related
rights herein granted to Licensee (a) in the event that Licensee fails to notify
Sony promptly in writing of any material change to any of the elements approved
in Section 5.1, above; (b) if Licensee fails to provide Sony in accordance with
the provisions of Section 5.2, above, with the prototype Executable Software for
any Licensed Product, in the format required by Sony, and which meets Sony's
specifications; provided, however, Sony shall not be entitled to exercise such
right of termination if Licensee's
____________
[*] Confidential Portions Omitted and Filed Separately with the Commission.
13
failure to provide such final Executable Software for any of the Licensed
Products is directly caused by Sony's failure to timely comply with any of its
material obligations expressly set forth herein.
15.4 NO REFUNDS. In the event of the termination of this License Agreement
----------
in accordance with any of the provisions of Sections 15.2 or 15.3, above, no
portion of any payments of any kind whatsoever previously provided to Sony
hereunder shall be owed or be repayable to Licensee.
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 or all
Licensed Products, Licensee shall provide Sony with an itemized statement,
certified to be accurate by an officer of Licensee, 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. Sony shall be
entitled to conduct a physical inspection of Licensee's inventory and work in
process during normal business hours in order to ascertain or verify such
inventory and/or statement.
16.2 REVERSION OF RIGHTS. If this License Agreement is terminated by Sony
-------------------
as a result of any breach or default by Licensee, the licenses and related
rights herein granted to Licensee shall immediately revert to Sony, and Licensee
shall cease and desist from any further use of the Sony Materials and any
Intellectual Property Rights related to the Sony Materials, and, subject to the
provisions of Section 16.3, below, Licensee shall have no further right to
continue the development, marketing, sale, and/or distribution of any units of
the Licensed Products, provided, however, that Licensee may distribute the
Licensee Software in its discretion so long as it does not contain any Sony
Materials or Licensed Trademarks, nor to continue to use the Licensed
Trademarks.
16.3 DISPOSAL OF UNSOLD UNITS. Provided this License Agreement is not
------------------------
terminated due to a breach or default by Licensee, Licensee may, upon expiration
or termination of this License 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 License 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 License Agreement is terminated as a result of any
breach or default by Licensee, any and all units of the Licensed Products
remaining in Licensee's inventory shall be destroyed by Licensee within five (5)
working days of such expiration or termination. Within five (5) working days
after such destruction, Licensee shall provide Sony with an itemized statement,
certified to be accurate by an officer of Licensee, 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 CONFIDENTIAL INFORMATION. Upon the expiration or earlier
----------------------------------
termination of this License Agreement, Licensee and Sony shall immediately
deliver to the other party, as the disclosing party 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 License 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
License Agreement.
16.5 RENEWAL OR EXTENSION OF LICENSE AGREEMENT. Sony shall be under no
-----------------------------------------
obligation to renew or extend this License Agreement notwithstanding any actions
taken by either of the parties prior to the expiration of this License
Agreement. Upon the expiration of this License 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
14
been sustained or to have arisen out of such expiration. However, the expiration
of this License Agreement shall not excuse either party from its previous breach
of any of the provisions of this License Agreement or from any obligations
surviving the expiration of this License Agreement, and full legal and equitable
remedies shall remain available for any breach or threatened breach of this
License Agreement or any obligations arising therefrom.
16.6 TERMINATION WITHOUT PREJUDICE. The expiration or termination of this
-----------------------------
License Agreement in accordance with the provisions of Section 15, above, shall
be without prejudice to any rights or remedies which one party may otherwise
have against the other party.
17. MISCELLANEOUS PROVISIONS.
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 and subject to confirmation
by letter sent via registered or certified mail, postage prepaid, return receipt
requested. The address for all notices or other communications required to be
sent to Sony or Licensee, 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.
17.2 FORCE MAJEURE. Neither Sony nor Licensee shall be liable for any loss
-------------
or damage or be deemed to be in breach of this License Agreement if its failure
to perform or failure to cure any of its obligations under this License
Agreement results from any event or circumstance beyond its reasonable control,
including, without limitation, any natural disaster, fire, flood, earthquake, or
other Act of God; shortage of equipment, materials, supplies, or transportation
facilities; strike or other industrial dispute; war or rebellion; or 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 Licensee'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) working days of discovery of
any such Force Majeure condition. If notice of the existence of any Force
Majeure condition is provided within such period, the time for performance or
cure shall be extended for a period equal to the duration of the Force Majeure
event or circumstance described in such notice, except that any such cause shall
not excuse the payment of any sums owed to Sony prior to, during, or after any
such Force Majeure condition.
17.3 NO PARTNERSHIP OR JOINT VENTURE. The relationship between Sony and
-------------------------------
Licensee, respectively, is that of licensor and licensee. Licensee is an
independent contractor and is not the legal representative, agent, joint
venturer, partner, or employee of Sony 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. Sony has entered into this License Agreement based upon
----------
the particular reputation, capabilities and experience of Licensee and its
officers, directors and employees. Accordingly, Licensee may not assign this
License 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 Sony shall first be obtained. Any attempted or purported
assignment, delegation or other such transfer without the required consent of
Sony shall be void and a material breach of this License Agreement. Subject to
the foregoing, this License Agreement shall inure to the benefit of the parties
and their respective successors and permitted assigns. Sony 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.
15
17.5 SUBCONTRACTORS. Licensee shall not sell, assign, delegate,
--------------
subcontract, sublicense or otherwise transfer or encumber all or any portion of
the licenses herein granted. Licensee shall have the right to employ suitable
subcontractors for the purposes of assisting Licensee with the development of
the Licensed Products, provided that Licensee must obtain the prior written
consent of Sony. Licensee shall not disclose to any subcontractor any
Confidential Information of Sony (as defined herein and in the Nondisclosure
Agreement), including, without limitation, any Sony Materials, unless and until
Licensee shall have such subcontractor sign a written agreement containing
substantially identical terms to the Nondisclosure Agreement and the
confidentiality provisions of this Agreement and shall submit a copy of such
agreement to Sony. Any and all agreements between Licensee and its permitted
subcontractors shall provide that Sony is a third party beneficiary of such
agreements and has the full right to bring any actions against such
subcontractors to comply in all respects with the terms and conditions of this
Agreement. Notwithstanding any consent which may be granted by Sony for Licensee
to employ any such permitted subcontractor(s), or any such separate agreement(s)
that may be entered into by Licensee with any such permitted subcontractor,
Licensee shall remain fully liable for its compliance with all of the provisions
of this License 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. Licensee shall cause its
subcontractors to comply in all respects with the terms and conditions of this
License 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 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 License Agreement and the performance
by the parties of this License 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
License Agreement binding, including, without limitation, the recording of this
License Agreement with any appropriate governmental authorities (if required).
17.7 GOVERNING LAW; CONSENT TO JURISDICTION. This License Agreement shall
--------------------------------------
be governed by and interpreted in accordance with the laws of the State of New
York, 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
License Agreement or to adjudicate any dispute arising hereunder shall be
brought in the courts of the County of New York, State of New York (if under
State law) or the Southern District of New York (if under Federal law). 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.
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 License 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 License 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, 4, 5, 6, 7.1.1, 12 and 14 of this Agreement would cause irreparable
harm to Sony, the extent of which would be difficult to ascertain. Accordingly,
Licensee agrees that, in addition to any other remedies to which Sony may be
entitled, in the event of a breach by Licensee or any of its employees or
permitted subcontractors of any such sections of this Agreement, Sony shall be
entitled to the immediate issuance without bond of exparte
16
injunctive relief enjoining any breach or threatened breach of any or all of
such provisions. In addition, Licensee shall indemnify Sony for all losses,
damages, liabilities, costs and expenses (including actual attorneys' fees and
all related costs) which Sony may sustain or incur as a result of such breach.
17.10 SEVERABILITY. In the event that any provision of this License
------------
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 License Agreement, while the remainder of this License
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 License Agreement
for any reason: 4, 6, 7.2, 9, 10.2, 11, 12, 13, 14, 15.4, 16, 17.4, 17.5, 17.7,
17.8, 17.9, 17.10.
17.12 WAIVER. No failure or delay by either party in exercising any right,
------
power, or remedy under this License Agreement shall operate as a waiver of any
such right, power, or remedy. No waiver of any provision of this License
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 License Agreement shall not be construed as a waiver of any
other provision of this License 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 License
------------
Agreement shall be effective unless in writing and signed by both of the
parties.
17.14 HEADINGS. The section headings used in this License Agreement are
--------
intended primarily for reference and shall not by themselves determine the
construction or interpretation of this License Agreement or any portion hereof.
17.15 INTEGRATION. This License Agreement (together with the Exhibits
-----------
attached hereto) constitutes the entire agreement between Sony and Licensee and
supersedes all prior or contemporaneous agreements, proposals, understandings,
and communications between Sony and Licensee, 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 two counterparts,
------------
each of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
17.17 CONSTRUCTION. This License Agreement shall be fairly interpreted in
------------
accordance with its terms and without any strict construction in favor of or
against either of the parties.
17
IN WITNESS WHEREOF, the parties have caused this License Agreement to be duly
executed as of the day and year first written above.
SONY COMPUTER ENTERTAINMENT OF AMERICA INTERPLAY PRODUCTIONS
By /s/ Xxxxxxx X. Xxxx By /s/ XXXXX XXXXX
-------------------------- ----------------------------
Title: President Title: President
---------------------- ------------------------
Date: Feb. 27, 1995 Date: 2/20/95
----------------------- -------------------------
NOT AN AGREEMENT UNTIL
EXECUTED BY BOTH PARTIES
18
EXHIBIT A
LICENSED TERRITORY
1. LICENSED TERRITORY: United States and Canada
-------------------
2. ADDITIONAL PROVISIONS:
----------------------
(a) DISTRIBUTION CHANNELS. Licensee may, pursuant to the licenses
---------------------
granted in Section 2 above, distribute Licensee's Licensed Products
throughout the Licensed Territory and may use such distribution
channels as Licensee deems appropriate, including the use of third
party distributors, resellers, dealers and sales representatives
(collectively, "Distributors").
(b) LIMITATIONS ON DISTRIBUTION. Notwithstanding any other provisions
---------------------------
in this License Agreement, Licensee 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 Licensee
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 Licensee reasonably should know that such Licensed Products will
be exported or resold outside of the Licensed Territory.
(c) CHANGES TO LICENSED TERRITORY. The licenses granted in Section 2
-----------------------------
of this License Agreement may only be exercised by Licensee in the
Licensed Territory. Sony shall have the right to delete, and intends
to delete any country or countries from the Licensed Territory if, in
Sony's reasonable judgment, the laws or enforcement of such laws in
such country or countries do not protect Sony's Intellectual Property
Rights. In the event a country is deleted from the Licensed Territory,
Sony shall deliver to Licensee a notice stating the number of days
within which Licensee shall cease exercising such licenses in the
deleted country or countries. Licensee 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.
E-1
EXHIBIT B
ROYALTIES
A. 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 with respect to a Licensed Product:
B. ADJUSTMENTS TO ROYALTY - HIT TITLE REBATE
-----------------------------------------
(1) In the event that the total purchases by Licensee from Sony with
respect to any Licensed Product exceed the following numbers of units during [*]
of the Licensed Product, Licensee shall be entitled to a rebate with respect
to royalties paid by Licensee to Sony pursuant to Section 9 of the Agreement
which shall be credited to Licensee's account 60 days following the date that
the relevant royalties are paid, 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 [*]% of Royalty paid
with respect to such units
(2) Each title shall be considered independently for purposes of
calculating and the rebates shall be [*]. By way of example:
a. If Licensee's aggregate orders for a single Licensed Product are less
than [*] no rebate is available.
b. If Licensee's aggregate orders for a single Licensed Product exceed
[*] but are less than [*] Licensee will receive [*]% of the
Royalty paid as a rebate with respect to the first units, at the time
Licensee places such excess order.
c. If Licensee's aggregate orders for a single Licensed Product exceed
[*] but are less than [*] Licensee will receive [*]% of the
Royalty paid as a rebate with respect to the first [*] units, at the
time Licensee places such excess order. (Please note that in this case
Licensee will only receive a [*]% additional rebate with respect to
the first [*] units because they have already received a [*]%
rebate.
____________
[*] Confidential Portions Omitted and Filed Separately with the Commission.
E-2
[LOGO OF SONY COMPUTER ENTERTAINMENT APPEARS HERE]
PRODUCT PROPOSAL
PLANNING GUIDE +
(Please use a separate form for each title)
================================================================================
[ * ]
* Confidential Portions Omitted and Filed Separately with the Commission.
