Exhibit
10.2


 


SONY
COMPUTER ENTERTAINMENT AMERICA INC.


 


AND


 


THQ
INC.


 


 





 


 


PLAYSTATION®
PORTABLE (“PSP”)


 


 


PSP
LICENSED PUBLISHER AGREEMENT


 





















 


TABLE
OF CONTENTS


 


	
  SECTION:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITION OF TERMS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  LICENSE GRANT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  DEVELOPMENT OF
  LICENSED PSP PRODUCTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  LIMITATIONS
  ON LICENSES; RESERVATION OF RIGHTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  QUALITY
  STANDARDS FOR THE LICENSED PSP PRODUCTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  MANUFACTURE
  OF THE LICENSED PSP PRODUCTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  MARKETING AND DISTRIBUTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  ROYALTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  INDEMNITIES;
  LIMITED LIABILITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  SCEA
  INTELLECTUAL PROPERTY RIGHTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  INFRINGEMENT
  OF SCEA INTELLECTUAL PROPERTY RIGHTS BY THIRD PARTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  TERM AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  EFFECT OF
  EXPIRATION OR TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  MISCELLANEOUS PROVISIONS

  	
   

  



 





















 


PLAYSTATION®
PORTABLE (“PSP”)


 


LICENSED
PSP PUBLISHER AGREEMENT


 


This LICENSED
PSP PUBLISHER AGREEMENT for the PlayStation Portable, (the “Agreement”
or “ PSP LPA”), entered into as of the 15th day
of September, 2004 (the “Effective Date”), by and between SONY COMPUTER
ENTERTAINMENT AMERICA INC., with offices at 919 E. Hillsdale Boulevard, Foster
City, CA 94404 (hereinafter “SCEA”), and THQ Inc., with offices at 27001 Agoura
Road, Suite 325, Calabasas Hills, CA 91301 (hereinafter Publisher”).


 


WHEREAS, SCEA,
its parent company, Sony Computer Entertainment Inc., and certain of their
affiliates and companies within the group of companies of which any of them
form a part (collectively referred to herein as “SCE” or alternatively “Sony”)
are designing and developing, and licensing core components of, a portable,
handheld computer entertainment system known as the PlayStation® Portable or the “PSP” computer
entertainment system (hereinafter referred to as the “ PSP Player”).


 


WHEREAS, SCEA
has the right to grant licenses to certain SCEA Intellectual Property Rights
within its licensed territory (as defined below) in connection with the PSP
Player.


 


WHEREAS,
Publisher desires to be granted a non-exclusive license to publish, develop,
have manufactured, market, distribute and sell Licensed PSP Products (as
defined below) pursuant to the terms and conditions set forth in this
Agreement; and SCEA is willing, on the terms and subject to the conditions of
this Agreement, to grant Publisher such a license.


 


NOW, THEREFORE,
in consideration of the representations, warranties and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Publisher and SCEA hereby agree as follows:


 


1.             Definition
of Terms.


 


1.1          “Advertising
Materials” means any advertising, marketing, merchandising, promotional, public
relations (including press releases) and display materials relating to or
concerning Licensed PSP Products or proposed Licensed PSP Products, or any
other advertising, merchandising, promotional, public relations (including
press releases) and display materials depicting any of the Licensed Trademarks.
For purposes of this Agreement, Advertising Materials include any
advertisements in which the PSP Player is referred to or used in any way,
including but not limited to giving the PSP Player away as prizes in contests
or sweepstakes and the public display of the PSP Player in product placement opportunities.


 


1.2          “Affiliate
of SCEA” means, as applicable, other regional SCE companies, including but not
limited to,  Sony Computer Entertainment
Inc. in Japan, Sony Computer Entertainment Europe Ltd. in the United Kingdom,
Sony Computer Entertainment Korea, Sony Computer Entertainment Hong Kong, Sony
Computer Entertainment China, or such other Sony Computer Entertainment entity
as may be established from time to time.


 


1.3          “Designated
Manufacturing Facility” means a manufacturing facility or facilities which is
designated by SCEA in its sole discretion to manufacture Licensed PSP Products
or their component parts, which may include manufacturing facilities owned and
operated by affiliated companies of SCEA.


 


1.4          “Executable
Software” means software which includes Product Software and any software
provided directly or indirectly by SCEA or an Affiliate of SCEA designed for
execution exclusively on the PSP Player and which has the ability to
communicate with the software resident in the PSP Player.


 


1.5          “Fiscal
Year” means a year measured from April 1 to March 31.


 


1.6          “Guidelines”
shall mean any guidelines of SCEA or an Affiliate of SCEA with respect to SCEA
Intellectual Property Rights, which may be set forth in the PSP SourceBook or
in other documentation provided by SCEA or an Affiliate of SCEA to Publisher.


 


1.7          “Legal
Attribution Line” means the legal attribution line used on SCEA marketing or
other materials, which shall be substantially similar to the following: “Product
copyright and trademarks are the property of the respective publisher or their
licensors”.


 


1.8          “Legal
Copy” means any legal or contractual information required to be used in
connection with a Licensed PSP Product or Product Information, including but
not limited to copyright and trademark attributions, contractual credits and
developer or distribution credits.


 


1.9          “Licensed
PSP Developer Agreement” or “PSP LDA” means a valid and current license
agreement for the development of Licensed PSP Products for the PSP Player,
fully executed between a Licensed PSP Developer and SCEA or an Affiliate of
SCEA.


 


1.10        “Licensed
PSP Products” means the Executable Software (which may be combined with
Executable Software of other Licensed PSP Publishers or Licensed


 


 


 


1





















 


PSP Developers), which shall consist of one interactive entertainment
game product developed for the PSP Player per Unit, in final form developed
exclusively for the PSP Player. 
Publisher shall have no right to package or bundle more than one product
developed for the PSP Player in a single Unit unless separately agreed with
SCEA. The term “Licensed PSP Products” expressly excludes traditional
non-interactive entertainment products such as movies or music or other
interactive entertainment products that are not complete games.


 


1.11        “Licensed
PSP Publisher” means any publisher that has signed a valid and then current
Licensed PSP Publisher Agreement.


 


1.12        “Licensed
PSP Publisher Agreement” or “PSP LPA” means a valid and current license
agreement for the publication, development, manufacture, marketing,
distribution and sale of Licensed PSP Products for the PSP Player, fully
executed between a Licensed PSP Publisher and SCEA or an Affiliate of SCEA.


 


1.13        “Licensed
Territory” means the United States (including its possessions and territories)
and Canada.  The Licensed Territory may
be modified or supplemented by SCEA from time to time pursuant to Section 4.4
below.


 


1.14        “Licensed
Trademarks” means the trademarks, service marks, trade dress, logos and other
icons or indicia designated by SCEA in the PSP SourceBook or other Guidelines
for use on or in connection with Licensed PSP Products. Nothing contained in
this Agreement shall in any way grant Publisher the right to use the trademark “Sony”
in any manner.  SCEA may amend such
Licensed Trademarks from time to time in the PSP SourceBook or other Guidelines
or upon written notice to Publisher.


 


1.15        “Manufacturing
Specifications” means specifications setting forth terms relating to the manufacture
and assembly of PSP Format Discs, Packaging, Printed Materials and each of
their component parts, which shall be set forth in the PSP SourceBook or other
documentation provided by SCEA or a Designated Manufacturing Facility to
Publisher and which may be amended from time to time upon reasonable notice to
Publisher.


 


1.16        “Master
Disc” means a recordable disc in the form requested by SCEA containing final
pre-production Executable Software for a Licensed PSP Product.


 


1.17        “Packaging”
means, with respect to each Licensed PSP Product, the carton, containers,
packaging, edge labels and other proprietary labels, trade dress and wrapping
materials, including any jewel case (or other package or container) or parts
thereof, but excluding Printed Materials and PSP Format Discs.


 


1.18        “PSP
Format Discs”  means the discs formatted
for use with the PSP Player which, for purposes of this Agreement, are
manufactured on behalf of Publisher and contain Licensed PSP Products or SCEA
Demo Discs.


 


1.19        “Printed
Materials” means all artwork and mechanicals set forth on the disc label of the
PSP Format Disc relating to any of the Licensed PSP Products and on or inside
any Packaging for the Licensed PSP Product, and all instructional manuals,
liners, inserts, trade dress and other user information to be inserted into the
Packaging.


 


1.20        “Product
Information” means any information owned or licensed by Publisher relating in
any way to Licensed PSP Products, including but not limited to demos, videos,
hints and tips, artwork, depictions of Licensed PSP Product cover art and
videotaped interviews.


 


1.21        “Product
Proposal” shall have the meaning set forth in Section 5.2.1 hereto.


 


1.22        “Product
Software” means any software including audio and video material developed by a
Licensed PSP Publisher or Licensed PSP Developer, which, either by itself or
combined with Product Software of other licensees, when integrated with
software provided by SCEA or an Affiliate of SCEA, creates Executable Software.
It is understood that Product Software contains no proprietary information of
Sony or any other rights of SCEA.


 


1.23        “PSP
Development System Agreement” means an agreement entered into between SCEA and
a Licensed PSP Publisher, Licensed PSP Developer or other licensee for the sale
or license of Development Tools.


 


1.25        “PSP
Development Tools” means the PSP development tools sold or licensed by SCEA to
a Licensed PSP Publisher or Licensed PSP Developer for use in the development
of Executable Software for the PSP Player.


 


1.26        “Publisher
Intellectual Property Rights” means those intellectual property rights,
including but not limited to patents and other patent rights, copyrights,
trademarks, service marks, trade names, trade dress, mask work rights, utility
model rights, trade secret rights, technical information, know-how, and the
equivalents of the foregoing under the laws of any jurisdiction, and all other
proprietary or intellectual property rights throughout the universe, which
pertain to Product Software, Product Information, Printed Materials,
Advertising Materials or other rights of Publisher required or necessary under
this Agreement.


 


1.27        “Purchase
Order” means a written purchase order processed in accordance with the terms of
Section 6.2.2 hereto, the Manufacturing Specifications or other terms provided
separately by SCEA or a Designated Manufacturing Facility to Publisher.


 


 


 


 


2





















 


1.28        “SCEA
Demo Disc” means any demonstration disc developed and distributed by SCEA.


 


1.29        “SCEA
Established Third Party Demo Disc Programs” means (i) any consumer or trade
demonstration disc program specified in the PSP SourceBook, and (ii) any other
third party demo disc program established by SCEA for Licensed PSP Publishers.


 


1.30        “SCEA
Intellectual Property Rights” means those intellectual property rights,
including but not limited to patents and other patent rights, copyrights,
trademarks, service marks, trade names, trade dress, mask work rights, utility
model rights, trade secret rights, technical information, know-how, and the
equivalents of the foregoing under the laws of any jurisdiction, and all other
proprietary or intellectual property rights throughout the universe, which are
required to ensure compatibility with the PSP Player or which pertain to the
Licensed Trademarks.


 


1.31        “SCEA
Product Code” means the product identification number assigned to each Licensed
PSP 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 PSP Format Disc
relating to each Licensed PSP Product, as well as on most communications
between SCEA and Publisher as a mode of identifying the Licensed PSP Product
other than by title.


 


1.32        “SCE
Materials” means any data, object code, source code, firmware, documentation
(or any part(s) of any of the foregoing), related to the PSP Player, selected
in the sole judgment of SCEA, which are provided or supplied by SCEA or an
Affiliate of SCEA to Publisher or any Licensed PSP Developer and/or other
Licensed PSP Publisher.  For purposes of
this Agreement, SCE Materials shall not include any hardware portions of the
Development Tools, but shall include firmware in such hardware.


 


1.33        “PSP
SourceBook” means the PSP SourceBook (or any other reference guide containing
information similar to the PSP SourceBook but designated with a different name)
prepared by SCEA, which is provided separately to Publisher.  The PSP 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 PSP Products.


 


1.34        “Standard
Rebate” shall mean the rebate offered by SCEA on titles of Licensed PSP
Products that achieve specified sales volumes as set forth in Section 8.4 of
this Agreement.


 


1.35        “Third
Party Demo Disc” means any demo disc developed and marketed by a Licensed PSP
Publisher, which complies with the terms of an SCEA Established Third Party
Demo Disc Program.


 


1.36        “Unit”
means an individual copy of a Licensed PSP Product title regardless of the
number of PSP Format Discs constituting such Licensed PSP Product title.


 


1.37        “Wholesale
Price” or “WSP” shall mean the greater of (i) the published price of the
Licensed PSP Product offered to retailers by Publisher as evidenced by a sell
sheet or price list issued by Publisher no later than thirty (30) days before
first commercial shipment of the Licensed PSP Product, or (ii) the actual price
paid by retailers upon the first commercial shipment of a Licensed PSP Product
without offsets, rebates or deductions from invoices of any kind.


 


2.             License.


 


2.1          License Grant.  SCEA grants to Publisher, and Publisher
hereby accepts, for the term of this Agreement, within the Licensed Territory,
under SCEA Intellectual Property Rights owned, controlled or licensed by SCEA,
a non-exclusive, non-transferable license, without the right to sublicense
(except as specifically provided herein), to publish Licensed PSP Products
using SCE Materials, which right shall be limited to the following rights and
other rights set forth in, and in accordance with the terms of, this PSP
LPA:  (i) to produce or develop Licensed
PSP Products and to enter into agreements with Licensed PSP Developers and
other third parties to develop Licensed PSP Products; (ii) to have such
Licensed PSP Products manufactured; (iii) to market, distribute and sell such
Licensed PSP Products and to authorize others to do so within the licensed
territory; (iv) to use the Licensed Trademarks strictly and only in connection
with the development, manufacturing, marketing, packaging, advertising and
promotion of the Licensed PSP Products, and subject to SCEA’s right of approval
as provided herein; and (v) to sublicense to end users the right to use the
Licensed PSP Products for noncommercial purposes in conjunction with the PSP
Player only, and not with other devices or for public performance.


 


2.2          Separate PlayStation Agreements.  Unless specifically set forth in this
Agreement, all terms used herein are specific to the PSP Player and the third
party licensing program related thereto and not to the original PlayStation,
PlayStation 2 entertainment systems. or third party licensing program related
thereto.  Licenses relating to the
original PlayStation or PlayStation 2 entertainment systems are subject to
separate agreements with SCEA, and any license of rights to Publisher under
such separate agreements shall not confer on Publisher any rights under the PSP
Player and vice versa.


 


3.             Development of Licensed PSP Products.


 


3.1          Right to Develop.  This PSP LPA grants Publisher the right
to develop Licensed PSP Products and the right to purchase or license
Development Tools, as is appropriate, from SCEA or its designated agent,
pursuant to a separate Development System Agreement with SCEA.


 


 


 


3





















 


In developing Executable Software (or portions thereof), Publisher and
its agents shall fully comply in all respects with any and all technical
specifications which may from time to time be issued by SCEA. In the event that
Publisher uses third party tools to develop Executable Software, Publisher
shall be responsible for ensuring that it has obtained appropriate licenses for
such use.


 


3.2          Development by Third Parties.  Except as otherwise set forth herein,
Publisher shall not provide SCE Materials or SCEA’s Confidential Information to
any third party. Publisher shall be responsible for determining that third
parties meet the criteria set forth herein. Publisher may contract with a third
party for development of Licensed PSP Products, provided that such third party
is: (i) a Licensed PSP Publisher, (ii) a Licensed PSP Developer, or (iii) an
SCEA-authorized subcontractor in compliance with the provisions of Section
16.6. Publisher shall notify SCEA in writing of the identity of any such third
party within thirty (30) days of entering into an agreement or other
arrangement with the third party.


 


4.             Limitations on Licenses; Reservation of Rights.


 


4.1          Reverse Engineering Prohibited.  Other than as expressly permitted by SCEA
in writing, Publisher shall not directly or indirectly disassemble, decrypt,
electronically scan, peel semiconductor components, decompile, or otherwise
reverse engineer in any manner or attempt to reverse engineer or derive source
code from, all or any portion of the SCE Materials, or permit, assist or
encourage any third party to do so. Other than as expressly permitted by SCEA
in writing, Publisher shall not use, modify, reproduce, sublicense, distribute,
create derivative works from, or otherwise provide to third parties, the SCE
Materials, in whole or in part, other than as expressly permitted by SCEA.  SCEA shall permit Publisher to study the
performance, design and operation of the Development Tools solely for the limited
purposes of developing and testing Publisher’s software applications, or to
build tools to assist Publisher with the development and testing of software
applications for Licensed PSP Products. 
Any tools developed or derived by Publisher resulting from the study of
the performance, design or operation of the Development Tools shall be
considered as derivative products of the SCE Materials for copyright purposes,
but may be treated as trade secrets of Publisher.  In no event shall Publisher patent any tools
created, developed or derived from SCE Materials.  Publisher shall not make available to any
third party any tools developed or derived from the study of the Development
Tools without the express written permission of SCEA.  Use of such tools shall be strictly limited
to the creation or testing of Licensed PSP Products and any other use, direct
or indirect of such tools is strictly prohibited.  Publisher shall be required in all cases to
pay royalties in accordance with Section 8 to SCEA on any of Publisher’s
products utilizing any SCE Materials or derivative works made therefrom.  Moreover, Publisher shall bear all risks
arising from incompatibility of its Licensed PSP Product and the PSP Player
resulting from use of Publisher-created tools. 
The burden of proof under this Section shall be on Publisher to show by
clear and convincing evidence if a dispute arises, and SCEA reserves the right
to require Publisher to furnish evidence satisfactory to SCEA that Publisher
has complied with this Section.


 


4.2          Reservation of SCEA’s Rights.


 


4.2.1       Limitation of Rights to Licenses  Granted.
The licenses granted in this Agreement extend only to the publication,
development, manufacture, marketing, distribution and sale of Licensed PSP
Products for use on the PSP Player, in such formats as may be designated by
SCEA within the Licensed Territory and does not permit transshipment of the
Licensed PSP Products to unlicensed territories unless expressly approved in
writing by SCEA or the Affiliate of SCEA with responsibility for licensing
publishing rights in the region.  Without
limiting the generality of the foregoing and except as otherwise provided
herein, Publisher shall not distribute or transmit the Executable Software or
the Licensed PSP Products via electronic means or any other means now known or
hereafter devised, including without limitation, via wireless, cable, fiber
optic means, telephone lines, microwave and/or radio waves, or over a network
of computers or other devices. Notwithstanding this limitation, Publisher may
electronically transmit Executable Software from site to site, or from machine
to machine over a computer network, for the sole purpose of facilitating
development; provided that no right of retransmission shall attach to any such
transmission, and provided further that Publisher shall use reasonable security
measures customary within the high technology industry to reduce the risk of
unauthorized interception or retransmission of such transmissions. This
Agreement does not grant any right or license under any SCEA Intellectual
Property Rights or otherwise, except as expressly provided herein, and no other
right or license is to be implied by or inferred from any provision of this
Agreement or the conduct of the parties hereunder.


 


4.2.2       Other Use of SCE Materials and SCEA Intellectual
Property Rights. 
Publisher shall not make use of any SCE Materials or any SCEA
Intellectual Property Rights (or any portion thereof) except as authorized by
and in compliance with the provisions of this Agreement. Publisher shall not
use the Executable Software, SCE Materials or SCEA’s Confidential Information
in connection with the development of any software for any emulator or other
computer hardware or software system. No right, license or privilege has been
granted to Publisher hereunder concerning the development of any collateral
product or other use or purpose of any kind whatsoever which displays or
depicts any of the Licensed Trademarks. The rights set forth in Section 2.1(v)
hereto are limited to the right to sublicense such rights to end users for
non-commercial use; any public performance relating to the Licensed PSP Product
or the PSP Player is prohibited unless expressly authorized in writing by SCEA.


 


 


4





















 


4.3          Reservation of Publisher’s Rights.  Separate and apart from SCE Materials and
other rights licensed to Publisher by SCEA hereunder, as between Publisher and
SCEA, Publisher retains all rights, title and interest in and to the Product
Software, and the Product Proposals and Product Information related thereto,
including without limitation Publisher Intellectual Property Rights therein, as
well as Publisher’s rights in any source code and other underlying material
such as artwork and music related thereto and any names used as titles for
Licensed PSP Products and other trademarks used by Publisher.  Nothing in this Agreement shall be construed
to restrict the right of Publisher to develop, distribute or transmit products
incorporating the Product Software and such underlying material (separate and
apart from the SCE Materials) for any hardware platform or service other than
the PSP Player, or to use Printed Materials or Advertising Materials approved
by SCEA as provided herein (provided that such Printed Materials and/or
Advertising Materials do not contain any Licensed Trademarks) as Publisher
determines for such other platforms. 
SCEA shall not do or cause to be done any act or thing in any way
impairing or tending to impair or dilute any of Publisher’s rights, title or
interests hereunder.  Notwithstanding the
foregoing, Publisher shall not distribute or transmit Product Software which is
intended to be used with the PSP Player via electronic means or any other means
now known or hereafter devised, including without limitation, via wireless,
cable, fiber optic means, telephone lines, microwave or radio waves, or a
network of computers or other devices, except as otherwise permitted in Section
4.2.1 hereto.


 


4.4          Additions to and Deletions from Licensed Territory.  SCEA may, from time to time, add one or more
countries to the Licensed Territory by providing written notice of such
addition to Publisher. SCEA shall also have the right to delete, and intends to
delete any countries from the Licensed Territory if, in SCEA’s reasonable
judgment, the laws or enforcement of such laws in such countries do not protect
SCEA Intellectual Property Rights.  In
the event a country is deleted from the Licensed Territory, SCEA shall deliver
to Publisher a notice stating the number of days within which Publisher shall
cease distributing Licensed PSP Products and shall retrieve any Development
Tools located in any such deleted country. 
Publisher shall cease distributing Licensed PSP Products, and retrieve
any Development Tools, directly or through subcontractors, by the end of the
period stated in such notice.


 


4.5          PSP SourceBook Requirement.  Publisher shall be required to comply with
all the provisions of the PSP SourceBook, including without limitation the
Technical Requirements Checklist therein, when published, or within a
commercially reasonable time following its publication to incorporate such
provisions, as if such provisions were set forth in this Agreement.


 


4.6          Covenant Not to Sue.  Publisher, on behalf of itself and its
representatives, affiliates, and any other person or entity acting on its
behalf, hereby agrees not to file any action against and covenants not to sue
SCEA, its parent, affiliates, subsidiaries or related companies on any and all
claims, rights, charges, damages or causes of action arising from the
infringement or alleged infringement of any U.S. or international patent owned
by, assigned or exclusively licensed to Publisher.  This Section shall survive any termination or
expiration of this Agreement.


 


5.             Quality Standards for the Licensed PSP Products.


 


5.1          Quality Assurance Generally.  The Licensed PSP Products (and all portions
thereof) and Publisher’s use of any Licensed Trademarks shall be subject to
SCEA’s prior written approval, which shall not be unreasonably withheld or
delayed and which shall be within SCEA’s sole discretion as to acceptable
standards of quality.  SCEA shall have
the right at any stage of the development of a Licensed PSP Product to review
such Licensed PSP Product to ensure that it meets SCEA’s quality assurance
standards. All Licensed PSP Products will be developed to utilize substantially
the particular capabilities of the PSP Player’s proprietary hardware, software
and graphics. No approval by SCEA of any element or stage of development of any
Licensed PSP Product shall be deemed an approval of any other element or stage
of such Licensed PSP Product, nor shall any such approval be deemed to
constitute a waiver of any of SCEA’s rights under this Agreement. In addition,
SCEA’s approval of any element or any stage of development of any Licensed PSP
Product shall not release Publisher from any of its representations and
warranties in Section 9.2 hereunder.


 


5.2          Product Proposals.


 


5.2.1       Submission of Product Proposal.  All Product Proposal submissions shall be in
conformance with the submissions provisions as published in the PSP SourceBook
as published or amended.  Publisher shall
submit to SCEA for SCEA’s written approval or disapproval, which shall not be
unreasonably withheld or delayed, a written concept document (the “Product
Proposal”) prior to commencing development of a Licensed Product. Such Product
Proposal must contain all information specified in the PSP SourceBook, as well
as any additional information that SCEA may deem to be useful in evaluating the
proposed Licensed PSP Product.


 


5.2.2       Approval of Product Proposal.  After SCEA’s review of Publisher’s Product
Proposal, Publisher will receive written notice from SCEA of the status of the
Product Proposal, which may range from “Pass” to “Review” to “Fail.” Such
conditions shall have the meanings ascribed to them in the PSP SourceBook, and
may be changed from time to time by SCEA. If a Product Proposal receives a “Fail”,
then neither Publisher nor any other Licensed PSP Developer or Licensed PSP
Publisher may re-submit such Product Proposal without significant, substantive
revisions.  SCEA shall have no obligation
to approve any Product Proposal submitted by Publisher. Any


 


 


5





















 


development conducted by or at the direction of Publisher and any legal
commitment relating to development work shall be at Publisher’s own financial
and commercial risk.  Publisher shall not
construe approval of a Product Proposal as a commitment by SCEA to grant final
approval to such Licensed PSP Product. Nothing herein shall restrict SCEA from
commercially exploiting any coincidentally similar concept(s) and/or
product(s), which have been independently developed by SCEA, an Affiliate of
SCEA or any third party.


 


5.2.3       Changes to Product Proposal.
Publisher shall notify SCEA promptly in writing in the event of any material
proposed change in any portion of the Product Proposal.  SCEA’s approval of a Product Proposal shall
not obligate Publisher to continue with development or production of the
proposed Licensed PSP 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 PSP
Product. In the event that Publisher licenses a proposed Licensed PSP Product
from another Licensed PSP Publisher or a Licensed PSP Developer, it shall
immediately notify SCEA of such change and must re-submit such Licensed PSP
Product to SCEA for approval in accordance with the provisions of Section 5.2.1
above.


 


5.3          Work-in-Progress.


 


5.3.1       Submission and Review of Work-in-Progress.  SCEA shall require Publisher to submit to
SCEA work-in-progress on Licensed PSP Products at intervals to be defined in
the PSP SourceBook, throughout the development of the Licensed PSP Product, or
if requested by SCEA on written notice to Publisher, at any time during the
development process.  Publisher shall be
responsible for submitting work-in-progress to SCEA in accordance with the
product Review Process as determined by SCEA or otherwise set out in the PSP
SourceBook.  Failure to submit work-in-progress in accordance with any stage of the
Review Process may, at SCEA’s discretion, result in revocation of approval of
such Product Proposal.


 


5.3.2       Approval of Work in Progress. SCEA
shall have the right to approve, reject or require additional information with
respect to each stage of the Review Process. 
Publisher shall make submission of the Licensed Product at first
playable, pre-alpha, alpha, beta and final, or at such development stages to be
more fully defined in the PSP SourceBook. 
SCEA shall approve each development stage of the Licensed Product or
otherwise specify in writing the reasons for any rejection or request for
additional information and shall state what corrections or improvements are
necessary to obtain approval.  If any
stage of the Review Process is not provided to SCEA or is not successfully met
after a reasonable cure period agreed to between SCEA and Publisher, SCEA shall
have the right to revoke the approval of Publisher’s Product Proposal.


 


5.3.3       Cancellation or Delay; Conditions of Approval.
Licensed PSP Products which are canceled by Publisher or are late in meeting
the final Executable Software delivery date by more than three (3) months
(without agreeing with SCEA on a modified final delivery date) shall be subject
to the termination provisions set forth in Section 14.3 hereto.  In addition, failure to make changes required
by SCEA to the Licensed PSP Product at any stage of the Review Process, or
making material changes to the Licensed PSP Product without SCEA’s approval,
may subject Publisher to the termination provisions set forth in Section 14.3
hereto.


 


5.4          Approval of Executable Software.  On or before the date specified in the
Product Proposal or as determined by SCEA pursuant to the Review Process,
Publisher shall deliver to SCEA for its inspection and evaluation, a final
version of the Executable Software for the proposed Licensed PSP Product.  SCEA will evaluate such Executable Software
and notify Publisher in writing of its approval or disapproval, which shall not
be unreasonably withheld or delayed.  If
such Executable Software is disapproved, SCEA shall specify in writing the
reasons for such disapproval and state what corrections and improvements are
necessary.  After making the necessary
corrections and improvements, Publisher shall submit a new version of such
Executable Software for SCEA’s approval. 
SCEA shall have the right to disapprove Executable Software if it fails
to comply with SCEA’s corrections or improvements or one or more conditions as
set forth in the PSP SourceBook with no obligation to review all elements of
any version of Executable Software.  All
final versions of Executable Software shall be submitted in the format
prescribed by SCEA and shall include such number of Master Discs as SCEA may
require from time to time.  Publisher
hereby (i) warrants that all final versions of Executable Software are fully
tested; (ii) shall use its best efforts to ensure such Executable Software is
fully debugged prior to submission to SCEA; and (iii) warrants that all
versions of Executable Software comply or will comply with standards set forth
in the PSP SourceBook or other documentation provided by SCEA to
Publisher.  In addition, prior to
manufacture of Executable Software, Publisher must sign an accountability form
stating that (x) Publisher approves the release of such Executable Software for
manufacture in its current form and (y) Publisher shall be fully responsible
for any problems related to such Executable Software.


 


5.5          Printed Materials.


 


5.5.1       Compliance with Guidelines. For
each proposed Licensed PSP Product, Publisher shall be responsible, at
Publisher’s expense, for creating and developing Printed Materials.  All Printed Materials shall comply with the
Guidelines, which may be amended from time to time, provided that Publisher
shall, except as otherwise provided herein, only be required to implement
amended Guidelines in subsequent orders of Printed Materials and shall not be
required to recall or destroy


 


 


6





















 


previously manufactured Printed Materials, unless such Printed
Materials do not comply with the original requirements in the Guidelines or
unless explicitly required to do so in writing by SCEA.


 


5.5.2       Submission and Approval of Printed Materials.  No later than submission of final Executable
Software for a proposed Licensed PSP Product, Publisher shall also deliver to
SCEA, for review and evaluation, the proposed final Printed Materials and a
form of limited warranty for the proposed Licensed PSP Product.  Failure to meet any scheduled release dates
for a Licensed PSP Product is solely the risk and responsibility of Publisher,
and SCEA assumes no responsibility for Publisher failing to meet such scheduled
release dates due to this submission process. The quality of such Printed
Materials shall be of the same quality as that associated with other commercially
available high quality software products. If any of the Printed Materials are
disapproved, SCEA shall specify the reasons for such disapproval and state what
corrections are necessary.  SCEA shall
have no liability to Publisher for costs incurred or irrevocably committed to
by Publisher for production of Printed Materials that are disapproved by SCEA.
After making the necessary corrections to any disapproved Printed Materials,
Publisher must submit new Printed Materials for approval by SCEA.  SCEA shall not unreasonably withhold or delay
its review of Printed Materials.


 


5.6          Advertising Materials.


 


5.6.1       Submission and Approval of Advertising Materials.
Pre-production samples of all Advertising Materials shall be submitted by
Publisher to SCEA, at Publisher’s expense, prior to any actual production, use
or distribution of any such items by Publisher or on its behalf. SCEA shall
evaluate and approve such Advertising Materials, which approval shall not be
unreasonably withheld or delayed, as to the following standards: (i) the
content, quality, and style of the overall advertisement; (ii) the quality,
style, appearance and usage of any of the Licensed Trademarks; (iii)
appropriate references of any required notices; and (iv) compliance with the
Guidelines. If any of the Advertising Materials are disapproved, SCEA shall
specify the reasons for such disapproval and state what corrections are
necessary.  SCEA may require Publisher to
immediately withdraw and reprint any Advertising Materials that have been
published but have not received the written approval of SCEA.  SCEA shall have no liability to Publisher for
costs incurred or irrevocably committed to by Publisher for production of
Advertising Materials that are disapproved by SCEA.  For each Licensed PSP Product, Publisher
shall be required to deliver to SCEA an accountability form stating that all
Advertising Materials for such Licensed PSP Product comply or will comply with
the Guidelines for use of the Licensed Trademarks. After making the necessary
corrections to any disapproved Advertising Materials, Publisher must submit new
proposed Advertising Materials for approval by SCEA.


 


5.6.2       Failure to Comply; Three Strikes Program.
Publishers who fail to obtain SCEA’s approval of
Advertising Materials prior to broadcast or publication shall be subject to the
provisions of the “Three Strikes” program outlined in the PSP SourceBook.
Failure to obtain SCEA’s approval of Advertising Materials could result in
termination of this PSP LPA or termination of approval of the Licensed PSP
Product, or could subject Publisher to the provisions of Section 14.4 hereto.
Failure to meet any scheduled release dates for Advertising Materials is solely
the risk and responsibility of Publisher, and SCEA assumes no responsibility
for Publisher failing to meet such scheduled release dates due to approval
requirements as set forth in this Section.


 


5.6.3       SCEA Materials. Subject in each
instance to the prior written approval of SCEA, Publisher may use advertising
materials owned by SCEA pertaining to the PSP Player or to the Licensed
Trademarks on such Advertising Materials as may, in Publisher’s judgment,
promote the sale of Licensed PSP Products.


 


5.7          Rating Requirements.  If required by SCEA or any governmental
entity, Publisher shall submit each Licensed PSP Product to a consumer advisory
ratings system designated by SCEA or such governmental entity for the purpose
of obtaining rating code(s) for each Licensed PSP 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) shall be displayed on the Licensed PSP Product
and in the associated Printed Materials and Advertising Materials, at Publisher’s
cost and expense, in accordance with the PSP SourceBook or other documentation
provided by SCEA to Publisher.


 


5.8          Publisher’s Additional Quality Assurance
Obligations.  If at any
time or times subsequent to the approval of Executable Software and Printed
Materials, SCEA identifies any material defects (such materiality to be
determined by SCEA in its sole discretion) with respect to the Licensed PSP
Product, or in the event that SCEA identifies any improper use of its Licensed
Trademarks or SCE Materials with respect to the Licensed PSP Product, or any
such material defects or improper use are brought to the attention of SCEA,
Publisher shall, at no cost to SCEA, promptly correct any such material
defects, or improper use of Licensed Trademarks or SCE Materials, to SCEA’s
commercially reasonable satisfaction, which may include, if necessary in SCEA’s
judgment, the recall and re-release of such Licensed PSP Product. In the event
any Units of Licensed PSP Products create any risk of loss or damage to any
property or injury to any person, Publisher shall immediately take effective
steps, at Publisher’s sole liability and expense, to recall or to remove such
defective Units from any affected channels of distribution, provided, however,
that if Publisher is not acting as the distributor and/or seller for the
Licensed PSP Products, its obligation hereunder shall be to use its best
efforts to arrange removal


 


 


7





















 


of such Licensed PSP Product from channels of distribution.  Publisher shall provide all end-user support
for the Licensed PSP Products and SCEA expressly disclaims any obligation to
provide end-user support on Publisher’s Licensed PSP Products.


 


6.             Manufacture of the Licensed PSP Products.


 


6.1          Manufacture of Units.  Upon approval of Executable Software and
associated Printed Materials pursuant to Section 5, and subject to Sections
6.1.2, 6.1.3 and 6.1.4 below, the Designated Manufacturing Facility will, in
accordance with the terms and conditions set forth in this Section 6, and at
Publisher’s expense (a) manufacture PSP Format Discs for Publisher; (b)
manufacture Publisher’s Packaging and/or Printed Materials; and/or (c) assemble
the PSP Format Discs with the Printed Materials and the Packaging.  Publisher shall comply with all Manufacturing
Specifications related to the particular terms set forth herein.  SCEA reserves the right to insert or require
the Publisher to insert certain Printed Materials relating to the PSP Player or
Licensed Trademarks into each Unit.


 


6.1.1       Manufacture of PSP Format Discs.


 


6.1.1.1    Designated Manufacturing Facilities.  To insure compatibility of the PSP Format
Discs with the PSP Player, consistent quality of the Licensed PSP Product and
incorporation of anti-piracy security systems, SCEA shall designate and license
a Designated Manufacturing Facility to reproduce PSP Format Discs.  Publisher shall purchase [   ]
of its requirements for PSP Format Discs from such Designated Manufacturing
Facility during the term of the Agreement. Any Designated Manufacturing
Facility shall be a third party beneficiary of this Agreement.


 


6.1.1.2    Creation of Master Licensed PSP Product.  Pursuant to Section 5.4 in connection with
final testing of Executable Software, Publisher shall provide SCEA with the
number of Master Discs specified in the PSP SourceBook.  A Designated Manufacturing Facility shall
create from one of the fully approved Master Discs provided by Publisher the
original master of the Licensed PSP Product from which all other copies of the
Licensed PSP Product are to be replicated. 
Publisher shall be responsible for the costs, as determined by the
Designated Manufacturing Facility, of producing such original master.  In order to insure against loss or damage to
the copies of the Executable Software furnished to SCEA, Publisher will retain
duplicates of all Master Discs, and neither SCEA nor any Designated
Manufacturing Facility shall be liable for loss of or damage to any Master
Discs or Executable Software.


 


6.1.2       Manufacture of Printed Materials.


 


6.1.2.1    Manufacture by Designated Manufacturing Facility.  If Publisher elects to obtain Printed
Materials from a Designated Manufacturing Facility, Publisher shall deliver all
SCEA-approved Printed Materials to that Designated Manufacturing Facility, at
Publisher’s sole risk and expense, and the Designated Manufacturing Facility
will manufacture such Printed Materials in accordance with this Section 6.  In order to insure against loss or damage to
the copies of the Printed Materials furnished to SCEA, Publisher will retain
duplicates of all Printed Materials, and neither SCEA nor any Designated
Manufacturing Facility shall be liable for loss of or damage to any such
Printed Materials.


 


6.1.2.2    Manufacture by Alternate Source.  Subject
to SCEA’s approval as provided in Section 5.5.2 hereto and in this Section,
Publisher may elect to be responsible for manufacturing its own Printed
Materials (other than any Artwork which may be placed directly upon the
PlayStation Disc, which Publisher will supply to the Designated Manufacturing
Facility for placement), at Publisher’s sole risk and expense.  Prior to production of each order, Publisher
shall be required to supply SCEA with samples of any Printed Materials not
produced or supplied by a Designated Manufacturing Facility, at no charge to
SCEA or Designated Manufacturing Facility, for SCEA’s approval with respect to
the quality thereof.  SCEA shall have the
right to disapprove any Printed Materials that do not comply with the
Manufacturing Specifications. Manufacturing Specifications for Printed
Materials shall be comparable to manufacturing specifications applied by SCEA
to its own software products for the PSP Player.  If Publisher elects to supply its own Printed
Materials, neither SCEA nor any Designated Manufacturing Facility shall be
responsible for any delays arising from use of Publisher’s own Printed
Materials.


 


6.1.3       Manufacture of Packaging.


 


6.1.3.1    Manufacture by Designated Manufacturing Facility.  To ensure consistent quality of the
Licensed PSP Products, SCEA may designate and license a Designated
Manufacturing Facility to reproduce proprietary Packaging for the PSP
Player.  If SCEA creates proprietary
Packaging for the PSP Player, then Publisher shall purchase [    ]
of its requirements for such proprietary Packaging from a Designated
Manufacturing Facility during the term of the Agreement, and the Designated
Manufacturing Facility will manufacture such Packaging in accordance with this
Section 6.


 


6.1.3.2    Manufacture by Alternate Source.  If SCEA elects to use standard,
non-proprietary Packaging for the PSP Player, then Publisher may elect to be
responsible for manufacturing its own Packaging (other than any proprietary
labels and any portion of a container containing Licensed Trademarks, which
Publisher must purchase from a Designated Manufacturing Facility). Publisher
shall assume all responsibility for the creation of such Packaging at Publisher’s
sole risk and expense. Publisher shall be responsible for encoding and printing


 


 


8





















 


proprietary edge labels provided by a Designated Manufacturing Facility
with information reasonably specified by SCEA from time to time and will apply
such labels to each Unit of the Licensed PSP Product as reasonably specified by
SCEA.  Prior to production of each order,
Publisher shall be required to supply SCEA with samples of any Packaging not
produced or supplied by a Designated Manufacturing Facility, at no charge to
SCEA or Designated Manufacturing Facility, for SCEA’s approval with respect to
the quality.  SCEA shall have the right
to disapprove any Packaging that does not comply with the Manufacturing
Specifications.  Manufacturing
Specifications for Packaging shall be comparable to manufacturing
specifications applied by SCEA to its own software products for the PSP
Player.  If Publisher procures Packaging
from an alternate source, then it must also procure assembly services from an
alternate source.  If Publisher elects to
supply its own Packaging, neither SCEA nor any Designated Manufacturing
Facility shall be responsible for any delays arising from use of Publisher’s
own Packaging.


 


6.1.4       Assembly Services.  Publisher may either procure assembly
services from a Designated Manufacturing Facility or from an alternate
source.  If Publisher elects to be
responsible for assembling the Licensed PSP Products, then the Designated
Manufacturing Facility shall ship the component parts of the Licensed PSP
Product to a destination provided by Publisher, at Publisher’s sole risk and
expense.  SCEA shall have the right to
inspect any assembly facilities utilized by Publisher in order to determine if
the component parts of the Licensed PSP Products are being assembled in
accordance with SCEA’s quality standards. SCEA may require that Publisher recall
any Licensed PSP Products that do not contain proprietary labels or other
material component parts or that otherwise fail to comply with the
Manufacturing Specifications.  If
Publisher elects to use alternate assembly facilities, neither SCEA nor any Designated
Manufacturing Facility shall be responsible for any delays or missing component
parts arising from use of alternate assembly facilities.


 


6.2          Price, Payment and Terms.


 


6.2.1       Price.  The applicable price for manufacture of any
Units of Licensed PSP Products ordered hereunder shall be provided to Publisher
by the Designated Manufacturing Facility. 
Purchase shall be subject to the terms and conditions set out in any
purchase order form supplied to Publisher by the Designated Manufacturing
Facility.


 


6.2.2       Orders.  Publisher shall issue to a Designated
Manufacturing Facility a written Purchase Order(s) in a form designated by SCEA
and containing the information required in the Manufacturing Specifications,
with a copy to SCEA.  All orders shall be
subject to approval by SCEA, which shall not be unreasonably withheld or
delayed.  Purchase Orders issued by
Publisher to a Designated Manufacturing Facility for each Licensed PSP Product
approved by SCEA shall be non-cancelable and be subject to the order requirements
of the Designated Manufacturing Facility.


 


6.2.3       Payment Terms.  Purchase Orders will be invoiced as soon as
reasonably practical after receipt, and such invoice will include both
manufacturing price and royalties payable pursuant to Section 8.1 or 8.2 below
for each Unit of Licensed PSP Products ordered. 
Each invoice will be payable either on a cash-in-advance basis or
pursuant to a letter of credit, or at SCEA’s sole discretion, on credit
terms.  Terms for cash-in-advance and
letter of credit payments shall be as set forth in the PSP SourceBook.  All amounts hereunder shall be payable in
United States dollars.  All associated
banking charges with respect to payments of manufacturing costs and royalties
shall be borne solely by Publisher.


 


6.2.3.1    Credit Terms.  SCEA may at its sole discretion extend credit
terms and limits to Publisher.  SCEA may
also revoke such credit terms and limits at its sole discretion.  If Publisher qualifies for credit terms, then
orders will be invoiced upon shipment of Licensed PSP Products and each invoice
will be payable within thirty (30) days of the date of the invoice.  Any overdue sums shall bear interest at the
rate of one and one-half (1- 1⁄2%) percent per month, or such lower rate as may
be the maximum rate permitted under applicable law, from the date when payment
first became due to and including the date of payment thereof.  Publisher shall be additionally liable for
all costs and expenses of collection, including without limitation, reasonable
fees for attorneys and court costs.


 


6.2.3.2    General Terms.  No deduction may be made from remittances
unless an approved credit memo has been issued by a Designated Manufacturing
Facility.  Neither SCEA nor a Designated
Manufacturing Facility shall be responsible for shortage or breakage with
respect to any order if component parts or assembly services are obtained from
alternate sources.  Each shipment to
Publisher shall constitute a separate sale, whether whole or partial fulfillment
of any order.  Nothing in this Agreement
shall excuse or be construed as a waiver of Publisher’s obligation to timely
provide any and all payments owed to SCEA and Designated Manufacturing
Facility.


 


6.3          Delivery of Licensed PSP Products.  Neither SCEA nor any Designated Manufacturing
Facility shall have an obligation to store completed Units of Licensed PSP
Products.  Publisher may either specify a
mode of delivery or allow the Designated Manufacturing Facility to select a
mode of delivery.


 


6.4          Ownership of Master Discs.  Due to the proprietary nature of the
mastering process, neither SCEA nor a Designated Manufacturing Facility shall
under any circumstances release any original master, Master Discs or


 


 


9





















 


other in-process materials to Publisher.  All such materials shall be and remain the
sole property of SCEA or Designated Manufacturing Facility.  Notwithstanding the foregoing, Publisher
Intellectual Property Rights contained in Product Software that is contained in
such in-process materials is, as between SCEA and Publisher, the sole and
exclusive property of Publisher or its licensors (other than SCEA or its
affiliates).


 


7.             Marketing
and Distribution.


 


7.1          Marketing Generally.  In accordance with the provisions of this
Agreement and at no expense to SCEA, Publisher shall, and shall direct its
distributors to, diligently market, sell and distribute the Licensed PSP
Products, and shall use commercially reasonable efforts to stimulate demand for
such Licensed PSP Products in the Licensed Territory and to supply any
resulting demand.  Publisher shall use
its reasonable best efforts to protect the Licensed PSP Products from and
against illegal reproduction or copying by end users or by any other persons or
entities.


 


7.2          Samples.  Publisher shall provide to SCEA, at no
additional cost, for SCEA’s internal use, [   ] sample copies of each Licensed
PSP Product.  Publisher shall pay any
manufacturing costs to the Designated Manufacturing Facility in accordance with
Section 6.2, but shall not be obligated to pay royalties, in connection with
such sample Units. In the event that Publisher assembles any Licensed PSP
Product using an alternate source, Publisher shall be responsible for shipping
such sample Units to SCEA at Publisher’s cost and expense.  SCEA shall not directly or indirectly resell
any such sample copies of the Licensed PSP Products without Publisher’s prior
written consent.  SCEA may give sample
copies to its employees, provided that it uses its reasonable efforts to ensure
that such copies are not sold into the retail market.  In addition, subject to availability,
Publisher shall sell to SCEA additional quantities of Licensed PSP Products at
the Wholesale Price for such Licensed PSP Product.  Any changes to SCEA’s policy regarding sample
Units shall be set forth in the PSP SourceBook.


 


7.3          Marketing Programs of SCEA.  From time to time, SCEA may invite Publisher
to participate in promotional or advertising opportunities that may feature one
or more Licensed PSP Products from one or more Licensed PSP Publishers.  Participation shall be voluntary and subject
to terms to be determined at the time of the opportunity.  In the event Publisher elects to participate,
all materials submitted by Publisher to SCEA shall be submitted subject to
Section 10.2 below and delivery of such materials to SCEA shall constitute
acceptance by Publisher of the terms of the offer.  Moreover, SCEA may use the Legal Attribution
Line on all multi-product marketing materials, unless otherwise agreed in
writing.


 


7.4          Demonstration Disc Programs.  SCEA may, from time to time, provide
opportunities for Publisher to participate in SCEA Demo Disc programs.  In addition, SCEA may, from time to time,
grant to Publisher the right to create Third Party Demo Discs pursuant to SCEA Established
Third Party Demo Disc Programs.  The
specifications with respect to the approval, creation, manufacture, marketing,
distribution and sale of any such demo disc programs shall be set forth in the
PSP SourceBook or in other documentation to be provided by SCEA to
Publisher.  Except as otherwise
specifically set forth herein, in the PSP SourceBook or in other documentation,
Third Party Demo Discs shall be considered “Licensed PSP Products” and shall be
subject in all respects to the terms and conditions of this Agreement
pertaining to Licensed PSP Products.  In
addition, the following procedures shall also apply to SCEA Demo Discs and
Third Party Demo Discs:


 


7.4.1       SCEA Demo Discs.


 


7.4.1.1    License.  SCEA may, but shall not be obligated to,
invite Licensed PSP Publishers to participate in any SCEA Demo Disc
program.  Participation by Publisher in
an SCEA Demo Disc program shall be optional. 
If Publisher elects to participate in an SCEA Demo Disc program and
provides Product Information to SCEA in connection thereto, Publisher shall
thereby grant to SCEA a royalty-free license during the term of this Agreement
in the Licensed Territory to manufacture, use, sell, distribute, market,
advertise and otherwise promote Publisher’s Product Information as part of such
SCEA Demo Disc program.  In addition,
Publisher shall grant SCEA the right to feature Publisher and Licensed PSP
Product names in SCEA Demo Disc Advertising Materials and to use copies of
screen displays generated by the code, representative video samples or other
Product Information in such SCEA Demo Disc Advertising Materials.  All decisions relating to the selection of
first and third party Product Information and all other aspects of SCEA Demo
Discs shall be in the sole discretion of SCEA.


 


7.4.1.2    Submission and Approval of Product Information.  Upon receipt of written notice that SCEA has
tentatively chosen Publisher’s Product Information for inclusion in an SCEA
Demo Disc, Publisher shall deliver to SCEA such requested Product Information
by no later than the deadline set forth in such notice.  Separate notice will be sent for each SCEA
Demo Disc, and Publisher must sign each notice prior to inclusion in such SCEA
Demo Disc.  Publisher shall include its
own Legal Copy on the title screen or elsewhere in the Product Information
submitted to SCEA.  SCEA shall only
provide the Legal Attribution Line on the SCEA Demo Disc title screen and
packaging.  Publisher’s Product
Information shall comply with SCEA’s technical specifications provided to Publisher.  SCEA reserves the right to review and test
the Product Information provided and request revisions prior to inclusion on
the SCEA Demo Disc.  If SCEA requests
changes to the Product Information and Publisher elects to continue to
participate in such Demo


 


 


10





















 


Disc, Publisher shall make such changes as soon as possible after
receipt of written notice of such requested changes from SCEA, but not later
than the deadline for receipt of Product Information.  Failure to make such changes and provide the
modified Product Information to SCEA by the deadline shall result in the
Product Information being removed from the SCEA Demo Disc.  Costs associated with preparation of Product
Information supplied to SCEA shall be borne solely by Publisher. Except as
otherwise provided in this Section, SCEA shall not edit or modify Product
Information provided to SCEA by Publisher without Publisher’s consent, not to
be unreasonably withheld.  SCEA shall
have the right to use subcontractors to assist in the development of any SCEA
Demo Disc.  With respect to Product
Information provided by Publisher in demo form, the demo delivered to SCEA
shall not constitute the complete Licensed PSP Product and shall be, at a
minimum, an amount sufficient to demonstrate the Licensed PSP Product’s core
features and value, without providing so much information as to give consumers
a disincentive to purchase the complete Licensed PSP Product.


 


7.4.1.3    No Obligation to Publish.
Acceptance of Product Information for test and review shall not be deemed
confirmation that SCEA shall include the Product Information on an SCEA Demo
Disc, nor shall it constitute approval of any other element of the Licensed PSP
Product.  SCEA reserves the right to
choose from products submitted from other Licensed PSP Publishers and first
party products to determine the products to be included in SCEA Demo Discs, and
Publisher’s Licensed PSP Products will not be guaranteed prominence or
preferential treatment on any SCEA Demo Disc. 
Nothing herein shall be construed as creating an obligation of SCEA to
publish Product Information submitted by Publisher in any SCEA Demo Disc, nor
shall SCEA be obligated to publish, advertise or promote any SCEA Demo Disc.


 


7.4.1.4    SCEA Demo Discs Sold at Retail.  Publisher is aware and acknowledges that
certain SCEA Demo Discs may be distributed and sold by SCEA in the retail
market.  If Publisher elects to
participate in any SCEA Demo Disc program which is sold in the retail market,
as notified by SCEA to Publisher, Publisher acknowledges prior to participation
in any such SCEA Demo Disc that it is aware of no limitations regarding Product
Information provided to SCEA pursuant to the terms of this Agreement which
would in any way restrict SCEA’s ability to distribute or sell such SCEA Demo
Disc at retail, nor does Publisher or its licensors (other than SCEA and/or its
affiliates) have any anticipation of receiving any compensation from such
retail sales.  In the event that SCEA
institutes a SCEA Demo Disc in which a fee or royalty is charged to Publisher,
SCEA and Publisher will enter into a separate agreement regarding such SCEA
Demo Disc.


 


7.4.2       Third Party Demo Discs.


 


7.4.2.1    License.  Publisher may participate in any SCEA
Established Third Party Demo Disc Program. Publisher shall notify SCEA of its
intention to participate in any such program, and upon receipt of such notice,
SCEA shall grant to Publisher the right and license to use Licensed PSP
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 PSP SourceBook, which may be
modified from time to time at the sole discretion of SCEA. Unless separately
agreed in writing with SCEA, Third Party Demo Discs shall not be used,
distributed, promoted, bundled or sold in conjunction with other products.  In addition, SCEA hereby consents to the use
of the Licensed Trademarks in connection with Third Party Demo Discs, subject
to the approval procedures set forth in this Agreement.  If any SCEA Established Third Party Demo Disc
Program is specified by SCEA to be for promotional use only and not for resale,
and such Third Party Demo Disc is subsequently discovered to be for sale,
Publisher’s right to produce Third Party Demo Discs shall thereupon be
automatically revoked, and SCEA shall have the right to terminate any related
Third Party Demo Discs in accordance with the terms of Section 14.3 or 14.4
hereto.


 


7.4.2.2    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 all
requirements provided to Publisher by SCEA in the PSP 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 5.5,
respectively.  Furthermore, Publisher
shall obtain the approval of SCEA in connection with any Advertising Materials
relating to the Third Party Demo Discs in accordance with the approval
provisions set forth in Section 5.6. 
Costs associated with Third Party Demo Discs shall be borne solely by
Publisher. No approval by SCEA of any element of any Third Party Demo Disc
shall be deemed an approval of any other element thereto, nor does any such
approval constitute final approval for the related Licensed PSP Product.  Unless otherwise permitted by SCEA, Publisher
shall clearly and conspicuously state on all Third Party Demo Disc Packaging
and Printed Materials that the Third Party Demo Disc is for promotional
purposes only and not for resale.


 


7.4.2.3    Manufacture and Royalty of Third Party Demo Discs.
Publisher shall comply with all Manufacturing Specifications with respect to
the manufacture and payment for manufacturing costs of Third Party Demo Discs,
and Publisher shall also comply with all terms and conditions of Section 6
hereto.  No costs incurred in the
development, manufacture, licensing, production, marketing and/or distribution
(and if permitted by SCEA, sale) of the Third Party Demo Disc shall be deducted
from any amounts payable to SCEA hereunder.


 


 


11





















 


Royalties on Third Party Demo Discs shall be as provided in Section
8.2.


 


7.5          Contests and Sweepstakes of Publisher.  SCEA acknowledges that, from time to time,
Publisher may conduct contests and sweepstakes to promote Licensed PSP
Products.  SCEA shall permit Publisher to
include contest or sweepstakes materials in Printed Materials and Advertising
Materials, subject to compliance with the approval provisions of Section 5.5
and 5.6 hereunder, compliance with the provisions of Section 9.2 and 10.2
hereunder, and subject to the following additional terms and conditions:


 


(i)            Publisher represents that it has
retained the services of a fulfillment house to administer the contest or
sweepstakes and if it has not retained the services of a fulfillment house,
Publisher represents and warrants that it has the expertise to conduct such
contests or sweepstakes, and in any event, Publisher shall assume full
responsibility for all aspects of such contest or sweepstakes;


 


(ii)           Publisher warrants that each contest,
sweepstakes, and promotion, comply with local, state and federal laws or
regulations;


 


(iii)          Publisher represents and warrants that
it has obtained the consent of all holders of intellectual property rights
required to be obtained in connection with each contest or sweepstakes
including, but not limited to, the consent of any holder of copyrights or
trademarks relating to any Advertising Materials publicizing the contest or
sweepstakes, or the prizes being awarded to winners of the contest or
sweepstakes; and


 


(iv)          Publisher shall make available to SCEA
all contest and sweepstakes material prior to publication in accordance with
the approval process set forth in Section 5.5 or 5.6.


 


Approval by SCEA of
contest or sweepstakes materials for use in the Printed Materials or
Advertising Materials (or any use of the PSP Player or Licensed PSP Products as
prizes in such contest or sweepstakes) shall not constitute an endorsement by
SCEA of such contest or sweepstakes, nor shall such acceptance be construed as
SCEA having reviewed and approved such materials for compliance with any
federal or state law, statute, regulations, order or the like, which shall be
Publisher’s sole responsibility.


 


7.6          PlayStation Website.  All Licensed PSP Publishers shall be required
to provide Product Information for a web page for each of its Licensed PSP
Products for display on the PlayStation promotional website, or other website
or websites as may be operated by SCEA from time to time in connection with the
promotion of the PlayStation, PlayStation Portable, or PSP brands.  Specifications for Product Information for
such web pages shall be as provided in the PSP SourceBook.  Publisher shall provide SCEA with such
Product Information for each Licensed PSP Product upon submission of Printed
Materials to SCEA for approval in accordance with Section 5.5.2 hereto.  Publisher shall also provide updates to such
web page in a timely manner as required by SCEA in updates to the PSP
SourceBook.


 


7.7          Distribution.


 


7.7.1       Distribution Channels.  Publisher may use such distribution channels
as Publisher deems appropriate, including the use of third party distributors,
resellers, dealers and sales representatives. 
In the event that Publisher elects to have one of its Licensed PSP
Products distributed and sold by another Licensed PSP Publisher, Publisher must
provide SCEA with advance written notice of such election, the name of the
Licensed PSP Publisher and any additional information requested by SCEA
regarding the nature of the distribution services provided by such Licensed PSP
Publisher prior to manufacture of such Licensed PSP Product.


 


7.7.2       Limitations on Distribution. Notwithstanding
any other provisions in this Agreement, Publisher shall not, directly or
indirectly, solicit orders from or sell any Units of the Licensed PSP Products
to any person or entity outside of the Licensed Territory nor transship
Licensed PSP Products between regional SCE territories.  In addition, Publisher shall not directly or
indirectly solicit orders for or sell any Units of the Licensed PSP Products in
any situation where Publisher knows or reasonably should know that such
Licensed PSP Products may be exported or resold outside of the Licensed
Territory.


 


8.             Royalties.


 


8.1          Applicable Royalties on Licensed PSP Products.


 


8.1.1       Initial Orders.  Publisher shall pay SCEA, either directly or
through its designee, a per title royalty in United States dollars for each
Unit of the Licensed PSP Products manufactured based on the initial Wholesale
Price of the Licensed PSP Product, as follows: 


 


	
   

  	
   

  	
  Wholesale
  Price

  	
   

  	
  Per
  Title Royalty

  
	
  [  ]

  	
   

  	
  [  ]

  	
   

  	
  [  ]

  
	
  [   ]

  	
   

  	
  [   ]

  	
   

  	
  [   ]

  
	
  [    ]

  	
   

  	
  [    ]

  	
   

  	
  [    ]

  



 


In the absence of
satisfactory evidence to support the WSP, the royalty rate that shall apply
will be the greater of [       ] per Unit or the Level 3
royalty applied to the highest known WSP. 
Royalties may be subject to change in SCEA’s discretion upon sixty (60)
days notice to Publisher.


 


 










	
  [ ] Confidential portion omitted and filed
  separately with the Secrurities and Exchange Commission.

  	
   

  
	
   

  	
   

  
			



 


12





















 


Upon receipt of such
notice, Publisher shall have the option to terminate this Agreement upon
written notice to SCEA rather than having such revised royalty structure go
into effect.


 


8.1.2       Reorders and Other Programs.  Royalties on additional orders to
manufacture a specific Licensed PSP Product, regardless of which Publisher
submits the order, shall be the royalty determined by the initial Wholesale
Price as reported by initial Publisher for that Licensed PSP Product regardless
of the wholesale price of the Licensed PSP Product at the time of reorder,
except in the event that the Wholesale Price increases for such Licensed PSP
Product, in which case the royalty shall be adjusted upwards to reflect the
higher Wholesale Price.  Licensed PSP
Products qualifying for SCEA’s “Greatest Hits” programs or other programs
offered by SCEA shall be subject to the royalties applicable for such programs.
Publisher acknowledges that as of the date of execution of this Agreement no “Greatest
Hits” program exists for the PSP Third Party licensing program.


 


8.2          Third Party Demo Disc Program Royalties:
Publisher shall pay SCEA a per Unit royalty in United States dollars of [     ]
for each Third Party Demo Disc Unit manufactured. The quantity of Units ordered
shall comply with the terms of such SCEA Established Third Party Demo Disc
Program.


 


8.3          Payment For Licensed PSP Product.  Payment of royalties under Sections 8.1
and 8.2 shall be made to SCEA through its Designated Manufacturing Facility
concurrent with the placement of an order to manufacture Licensed PSP Product
and payment of manufacturing costs in accordance with the terms and conditions
set forth in Sections 6.2.3, unless otherwise agreed in writing with SCEA. At
the time of placing an order to manufacture a Licensed PSP Product, Publisher
shall submit to SCEA an accurate accounting statement setting out the number of
units of Licensed PSP 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 PSP Product a separate
certification, in the form provided by SCEA in the PSP 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.  Payment shall be made prior to
manufacture unless SCEA has agreed to extend credit terms to Publisher in
writing pursuant to Section 6.2.3.1. 
Nothing herein shall be construed as requiring SCEA to extend credit
terms to Publisher.  The accounting
statement due hereunder shall be subject to the audit and accounting provisions
set forth in paragraph 16.2 below. No costs incurred in the development,
manufacture, marketing, sale and/or distribution of the Licensed PSP Products
shall be deducted from any royalties payable to SCEA hereunder. Similarly,
there shall be no deduction from the royalties otherwise owed to SCEA as a
result of any uncollectible accounts owed to Publisher, or for any credits,
discounts, allowances or returns which Publisher may credit or otherwise grant
to any third party customer of any Units of the Licensed PSP Products, or for
any taxes, fees, assessments or expenses of any kind which may be incurred by
Publisher in connection with its sale or distribution of any Units of the
Licensed PSP Products or arising with respect to the payment of royalties.  In addition to the royalty payments provided
to SCEA, Publisher shall be solely responsible for and bear any cost relating
to any withholding taxes or other such assessments which may be imposed by any
governmental authority with respect to the royalties paid to SCEA hereunder;
provided, however, that SCEA shall not manufacture Licensed PSP 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 or assessments have
in fact been paid.


 


8.4          Rebates, Promotions or Discounts.   From time to time SCEA may, at its sole
option, offer to Publisher programs which result in rebates or other reduced
royalties to Publisher.  Eligibility to
participate in a program offered by SCEA shall be determined by the terms and
conditions set forth for participation at the time the program is offered.  SCEA reserves the right to alter, extend, or
terminate program offerings upon notice to Publishers.  Nothing contained herein shall require SCEA
to offer any rebate, promotion, or discount program to Publisher during the
term of this Agreement.


 


9.             Representations and Warranties.


 


9.1          Representations and Warranties of SCEA.  SCEA represents and warrants solely for the
benefit of Publisher that SCEA has the right, power and authority to enter into
this Agreement and to fully perform its obligations hereunder.


 


9.2          Representations and Warranties of Publisher.  Publisher represents and warrants that:


 


(i)            There
is no threatened or pending action, suit, claim or proceeding alleging that the
use by Publisher of all or any part of the Product Software, Product Proposals,
Product Information, Printed Materials, Advertising Materials or any underlying
work or content embodied therein, or any name, designation or trademark used in
conjunction with the Licensed PSP 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 Product Software, Product Proposals, Product
Information, Printed Materials, Advertising Materials or any underlying work or
content embodied therein, or any name, designation or trademark used in
conjunction with the Licensed PSP Products;


 


 


13





















 


(ii)           The
Product Software, Product Proposals, Product Information, Printed Materials and
Advertising Materials and their contemplated use under this Agreement do not
and shall not infringe any person’s or entity’s rights including without
limitation, patents, copyrights (including rights in a joint work), trademarks,
trade dress, trade secret, rights of publicity, privacy, performance, moral
rights, literary rights and any other third party right;


 


(iii)          Publisher
has the right, power and authority to enter into this Agreement, to grant SCEA
the rights granted hereunder and to fully perform its obligations hereunder;


 


(iv)          The
making of this Agreement by Publisher does not violate any separate agreement,
rights or obligations existing between Publisher and any other person or
entity, and, throughout the term of this Agreement, Publisher shall not make
any separate agreement with any person or entity that is inconsistent with any
of the provisions of this Agreement;


 


(v)           Publisher
has not sold, assigned, leased, licensed or in any other way disposed of or
encumbered the rights granted to Publisher hereunder, and Publisher will not
sell, assign, lease, license or in any other way dispose of or encumber any of
such rights except as expressly permitted hereunder or as consented to by SCEA
in writing;


 


(vi)          Publisher
has obtained the consent of all holders of intellectual property rights
required to be obtained in connection with use of any Product Information by
SCEA as licensed hereunder, and Product Information when provided to SCEA in
accordance with the terms of this Agreement may be published, marketed,
distributed and sold by SCEA in accordance with the terms and conditions of
this Agreement and without SCEA incurring any royalty, residual, union, guild or
other fees;


 


(vii)         Publisher
shall not make any representation or give any warranty to any person or entity
expressly or implicitly on SCEA’s behalf, or to the effect that the Licensed
PSP Products are connected in any way with SCEA (other than that the Executable
Software and/or Licensed PSP Products have been developed, marketed, sold
and/or distributed under license from SCEA);


 


(viii)        In
the event that Executable Software is delivered to other Licensed PSP
Publishers or Licensed PSP Developers by Publisher in source code form,
Publisher will take all precautions consistent with the protection of valuable
trade secrets by companies in high technology industries to ensure the
confidentiality of such source code;


 


(ix)           The
Executable Software and any Product Information delivered to SCEA shall be in a
commercially acceptable form, free of significant bugs, defects, time bombs or
viruses which could disrupt, delay, destroy the Executable Software or PSP
Player or render either of them less than fully useful, and shall be fully
compatible with the PSP Player and any peripherals listed on the Printed
Materials as compatible with the Licensed PSP Product;


 


(x)            Each
of the Licensed PSP Products, Executable Software, Printed Materials and
Advertising Materials shall be developed, marketed, sold and distributed by or
at the direction of Publisher in an ethical manner and in full compliance with
all applicable federal, state, provincial, local and foreign laws and any
regulations and standards promulgated thereunder (including but not limited to
federal and state lottery laws as currently interpreted and enforced) and will
not contain any obscene or defamatory matter;


 


(xi)           Publisher’s
policies and practices with respect to the development, marketing, sale, and/or
distribution of the Licensed PSP Products shall in no manner reflect adversely
upon the name, reputation or goodwill of SCEA;


 


(xii)          Publisher
has, or will contract with a Licensed PSP Developer for, the technical
expertise and resources necessary to fulfill its obligations under this
Agreement; and


 


(xiii)         Publisher
shall make no false, misleading or inconsistent representations or claims with
respect to any Licensed PSP Products, the PSP Player or SCEA.


 


10.          Indemnities; Limited Liability.


 


10.1        Indemnification by SCEA.  SCEA shall indemnify and hold Publisher
harmless from and against any and all third party claims, losses, liabilities,
damages, expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim which result from or are in
connection with a breach of any of the representations or warranties provided
by SCEA herein; provided, however, that Publisher shall give prompt written
notice to SCEA of the assertion of any such claim, and provided, further, that
SCEA shall have the right to select counsel and control the defense and
settlement thereof. SCEA shall have the exclusive right, at its discretion, to
commence and prosecute at its own expense any lawsuit or to take such other
action with respect to such matters as shall be deemed appropriate by
SCEA.  Publisher shall provide SCEA, at
no expense to Publisher, reasonable assistance and cooperation concerning any
such matter; and Publisher shall not agree to the settlement of any such claim,
action or proceeding without SCEA’s prior written consent.


 


10.2        Indemnification By Publisher.  Publisher shall indemnify and hold SCEA
harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of


 


 


14





















 


any such claim, which result from or are in connection with (i) a
breach of any of the provisions of this Agreement; or (ii) infringement of a
third party’s intellectual property rights by Publisher; or (iii) any claims of
or in connection with any personal or bodily injury (including death) or
property damage, by whomever such claim is made, arising out of, in whole or in
part, the development, marketing, sale, distribution or use of any of the
Licensed PSP Products (or portions thereof) unless due directly to the breach
of SCEA in performing any of the specific duties or providing any of the
specific services required; or (iv) any federal, state or foreign civil or
criminal actions relating to the development, marketing, sale or distribution of
Licensed PSP Products.  SCEA shall give
prompt written notice to Publisher of the assertion of any such indemnified
claim, and, with respect to third party claims, actions or proceedings against
SCEA, SCEA shall have the right to select counsel for SCEA and reasonably
control the defense and settlement thereof. 
Subject to the above, Publisher shall have the right, at its discretion,
to select its own counsel, to commence and prosecute at its own expense any
lawsuit, to reasonably control the defense and settlement thereof or to take
such other action with respect to claims, actions or proceedings by or against
Publisher.  SCEA shall retain the right
to approve any settlement.  SCEA shall
provide Publisher, at no expense to SCEA, reasonable assistance and cooperation
concerning any such matter; and SCEA shall not agree to the settlement of any
such claim, action or proceeding (other than third party claims, actions or
proceedings against SCEA) without Publisher’s prior written consent.


 


10.3        LIMITATION OF LIABILITY.


 


10.3.1     LIMITATION OF SCEA’S LIABILITY.  IN NO EVENT SHALL SCEA OR
OTHER SONY AFFILIATES AND THEIR SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR
AGENTS BE LIABLE FOR LOSS OF PROFITS, OR ANY SPECIAL, PUNITIVE, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF, RELATING TO OR IN CONNECTION
WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE BREACH OF THIS AGREEMENT
BY SCEA, THE MANUFACTURE OF THE LICENSED PSP PRODUCTS AND THE USE OF THE
LICENSED PSP PRODUCTS, EXECUTABLE SOFTWARE OR THE PSP PLAYER BY PUBLISHER OR
ANY END-USER, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),
INDEMNITY, PRODUCT LIABILITY OR OTHERWISE. 
IN NO EVENT SHALL SCEA’S LIABILITY ARISING UNDER, RELATING TO OR IN
CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY LIABILITY FOR
DIRECT OR INDIRECT DAMAGES, AND INCLUDING WITHOUT LIMITATION ANY LIABILITY
UNDER SECTION 10.1, EXCEED THE TOTAL AMOUNT PAID BY PUBLISHER TO SCEA UNDER
THIS AGREEMENT.  EXCEPT AS EXPRESSLY SET
FORTH HEREIN, NEITHER SCEA NOR ANY SONY AFFILIATE, NOR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, SHALL BEAR ANY RISK, OR HAVE ANY
RESPONSIBILITY OR LIABILITY, OF ANY KIND TO PUBLISHER OR TO ANY THIRD PARTIES
WITH RESPECT TO THE QUALITY, OPERATION OR PERFORMANCE OF ANY PORTION OF THE SCE
MATERIALS, THE PSP PLAYER OR ANY LICENSED PSP PRODUCT.


 


10.3.2     LIMITATION OF PUBLISHER’S LIABILITY.  IN NO EVENT SHALL
PUBLISHER OR ITS AFFILIATED COMPANIES AND THEIR SUPPLIERS, OFFICERS, DIRECTORS,
EMPLOYEES OR AGENTS BE LIABLE TO SCEA FOR ANY LOSS OF PROFITS, OR ANY SPECIAL,
PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF, RELATED
TO OR IN CONNECTION WITH (i) THIS AGREEMENT OR (ii) THE USE OR DISTRIBUTION IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT OF ANY CODE PROVIDED
BY SCEA, IN WHOLE OR IN PART, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING
NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR OTHERWISE, PROVIDED  THAT SUCH LIMITATIONS SHALL NOT APPLY TO DAMAGES RESULTING FROM
PUBLISHER’S BREACH OF SECTIONS 4, 10.2, 11 OR 13 OF THIS AGREEMENT, AND
PROVIDED FURTHER THAT SUCH LIMITATIONS SHALL NOT APPLY TO AMOUNTS WHICH
PUBLISHER MAY BE REQUIRED TO PAY TO THIRD PARTIES UNDER SECTIONS 10.2 OR 16.10.


 


10.4        DISCLAIMER OF WARRANTY.  EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH HEREIN, NEITHER SCEA NOR ITS AFFILIATES AND SUPPLIERS MAKE,
NOR DOES PUBLISHER RECEIVE, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED
OR STATUTORY, REGARDING THE SCE MATERIALS, SCEA’S CONFIDENTIAL INFORMATION THE
PSP PLAYER, THE UNITS OF THE LICENSED PSP PRODUCTS MANUFACTURED HEREUNDER OR
PUBLISHER’S PRODUCT INFORMATION INCLUDED ON SCEA DEMO DISCS.  SCEA SHALL NOT BE LIABLE FOR ANY INJURY, LOSS
OR DAMAGE, DIRECT, INDIRECT OR CONSEQUENTIAL, ARISING OUT OF THE USE OR
INABILITY TO USE ANY UNITS OR ANY SOFTWARE ERRORS 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


 


15





















 


AND THEIR EQUIVALENTS UNDER THE
LAWS OF ANY JURISDICTION, REGARDING THE SCE MATERIALS, SCEA’S CONFIDENTIAL
INFORMATION, LICENSED PSP PRODUCTS, SCEA DEMO DISCS AND THE PSP PLAYER.  ANY WARRANTY AGAINST INFRINGEMENT THAT MAY BE
PROVIDED IN SECTION 2-312(3) OF THE UNIFORM
COMMERCIAL CODE OR IN ANY OTHER COMPARABLE STATUTE IS EXPRESSLY DISCLAIMED.


 


11.          SCEA Intellectual Property Rights.


 


11.1        Licensed Trademarks.  The Licensed Trademarks and the goodwill
associated therewith are and shall be the exclusive property of SCEA or
Affiliates of SCEA.  Nothing herein shall
give Publisher any right, title or interest in or to any of the Licensed
Trademarks or any other trademarks of SCEA, other than the non-exclusive
license provided herein.  Publisher shall
not do or cause to be done any act or thing in any way impairing or tending to
impair or dilute any of SCEA’s rights, title or interests in or to any of the
Licensed Trademarks or any other trademarks of SCEA, nor shall Publisher
register any trademark in its own name or in the 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
or any other trademarks of SCEA.


 


11.2        License of SCE Materials and PSP Player.  All rights with respect to the SCE Materials
and PSP Player, including, without limitation, all SCEA Intellectual Property
Rights therein, are and shall be the exclusive property of SCEA or Affiliates
of SCEA.  Nothing herein shall give
Publisher any right, title or interest in or to the SCE Materials or the PSP
Player or any portion thereof, other than the non-exclusive license provided
herein.  Publisher shall not do or cause
to be done any act or thing in any way impairing or tending to impair any of
SCEA’s rights, title or interests in or to the SCE Materials or the PSP Player
or any portion thereof.


 


12.          Infringement of SCEA Intellectual Property Rights By Third Parties.


 


In the event that
Publisher discovers or otherwise becomes aware that any SCEA Intellectual
Property Rights have been or are being infringed upon by any third party,
Publisher shall promptly notify SCEA. 
SCEA shall have the sole right, in its discretion, to institute and
prosecute lawsuits against third parties for such infringement of SCEA
Intellectual Property Rights.  Any lawsuit
shall be prosecuted solely at the cost and expense of SCEA and all sums
recovered in any such lawsuits, whether by judgment, settlement or otherwise
shall belong solely to SCEA.  Upon
request of SCEA, Publisher shall execute all papers, testify on all matters and
otherwise cooperate in every way necessary and desirable for the prosecution of
any such lawsuit.  SCEA shall reimburse
Publisher for the reasonable expenses incurred as a result of such cooperation,
but unless authorized by other provisions of this Agreement, not costs and expenses
attributable to the conduct of a cross-claim or third party action.


 


13.          Confidentiality.


 


13.1        SCEA’s Confidential Information.


 


13.1.1     Definition of SCEA’s Confidential Information.
“SCEA’s Confidential Information” shall mean:


 


(i)            the PSP
Player, SCE Materials and Development Tools and this Agreement;


 


(ii)           other
documents and materials developed, owned, licensed or under the control of
SCEA, including all processes, data, hardware, software, inventions, trade
secrets, ideas, creations, improvements, designs, discoveries, developments, research
and know-how, including without limitation the PSP SourceBook and SCEA
Intellectual Property Rights relating to the PSP Player, SCE Materials or
Development Tools; and


 


(iii)          information
and documents regarding SCEA’s finances, business, marketing and technical
plans, business methods and production plans.


 


SCEA’s Confidential
Information may consist of information in any medium, whether oral, printed, in
machine-readable form or otherwise, including information apprised to Publisher
and reduced to tangible or written form at any time during the term of this
Agreement.  In addition, the existence of
a relationship between Publisher and SCEA for the purposes set forth herein
shall be deemed to be SCEA’s Confidential Information unless otherwise agreed
to in writing by the parties or until publicly announced by SCEA.


 


13.1.2     Term of Protection of SCEA’s Confidential
Information.  The term for
the protection of SCEA’s Confidential Information shall commence on the
Effective Date first above written and shall continue in full force and effect
as long as any of SCEA’s Confidential Information continues to be maintained as
confidential and proprietary by SCEA or SCE. 
During such term, Publisher shall, pursuant to Section 13.1.3 below,
safeguard and hold in trust and confidence and not disclose or use any and all
of SCEA’s Confidential Information except for the purposes specified.


 


13.1.3     Preservation of SCEA’s Confidential Information.  Publisher shall, with respect to SCEA’s
Confidential Information:


 


(i)            not
disclose SCEA’s Confidential Information to any person or entity, other than
those employees or directors of the Publisher whose duties justify a “need-to-know”
and who have executed a confidentiality agreement in which such employees or
directors have agreed not to


 


 


16





















 


disclose, and to hold confidential, all confidential information and
materials inclusive of those of third parties which may be disclosed to them or
to which they may have access during the course of their duties.  At SCEA’s request, Publisher shall provide
SCEA with a copy of such confidentiality agreement between Publisher and its
employees or directors, and shall also provide SCEA with a list of employee and
director signatories.  Publisher shall
not disclose any of SCEA’s Confidential Information to third parties, including
without limitation to consultants or agents. 
Any employees or directors who obtain access to SCEA’s Confidential
Information shall be advised by Publisher of the confidential nature of SCEA’s
Confidential Information, and Publisher shall be responsible for any breach of
this Agreement by its employees or directors.


 


(ii)           take
all measures necessary to safeguard SCEA’s Confidential Information in order to
avoid disclosure, publication, or dissemination, using as high a degree of care
and scrutiny, but at least reasonable care, as is consistent with the
protection of valuable trade secrets by companies in high technology
industries.


 


(iii)          ensure
that all written materials relating to or containing SCEA’s Confidential
Information be maintained in a restricted access area and plainly marked to
indicate the secret and confidential nature thereof.


 


(iv)          at
SCEA’s request, return promptly to SCEA any and all portions of SCEA’s
Confidential Information, together with all copies thereof.


 


(v)           not
use, modify, reproduce, sublicense, copy, distribute, create derivative works
from, or otherwise provide to third parties, SCEA’s Confidential Information,
or any portion thereof, except as provided herein, nor shall Publisher remove
any proprietary legend set forth on or contained within any of SCEA’s
Confidential Information.


 


13.1.4     Exceptions. The foregoing
restrictions shall not apply to any portion of SCEA’s Confidential Information
which:


 


(i)            was
previously known to Publisher without restriction on disclosure or use, as
proven by written documentation of Publisher; or


 


(ii)           is or legitimately
becomes part of the public domain through no fault of Publisher or its
employees; or


 


(iii)          is independently
developed by Publisher’s employees who have not had access to SCEA’s
Confidential Information, as proven by written documentation of Publisher; or


 


(iv)          is required to be
disclosed by administrative or judicial action; provided that Publisher must
attempt to maintain the confidentiality of SCEA’s Confidential Information by
asserting in such action the restrictions set forth in this Agreement, and,
immediately after receiving notice of such action or any notice of any
threatened action, Publisher must notify SCEA to give SCEA the maximum
opportunity to seek any other legal remedies to maintain such SCEA’s
Confidential Information in confidence as herein provided; or


 


(v)           is approved for release
by written authorization of SCEA.


 


13.1.5     No Obligation to License.  Disclosure of SCEA’s Confidential
Information to Publisher shall not constitute any option, grant or license from
SCEA to Publisher under any patent or other SCEA Intellectual Property Rights
now or hereinafter held by SCEA.  The disclosure
by SCEA to Publisher of SCEA’s Confidential Information shall not result in any
obligation on the part of SCEA to approve any materials of Publisher, nor shall
such disclosure by SCEA give Publisher any right to develop, directly or
indirectly, manufacture or sell any product derived from or which uses any of
SCEA’s Confidential Information, other than as expressly set forth in this
Agreement.


 


13.1.6     Publisher’s Obligations Upon Unauthorized
Disclosure.  If at any
time Publisher becomes aware of any unauthorized duplication, access, use,
possession or knowledge of any SCEA Confidential Information, it shall notify
SCEA as soon as reasonably practicable, and shall promptly act to recover any
such information and prevent further breach of the confidentiality obligations
herein.  Publisher shall provide any and
all reasonable assistance to SCEA to protect SCEA’s proprietary rights in any
SCEA Confidential Information that it or its employees or permitted
subcontractors may have directly or indirectly disclosed or made available, and
that may be duplicated, accessed, used, possessed or known in a manner or for a
purpose not expressly authorized by this Agreement, including but not limited
to enforcement of confidentiality agreements, 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 SCEA to protect its proprietary rights in SCEA’s Confidential
Information.  Publisher shall take all
steps requested by SCEA to prevent the recurrence of any unauthorized
duplication, access, use, possession or knowledge of SCEA’s Confidential
Information.  In addition, SCEA shall
have the right to pursue any actions at law or in equity, including without
limitation the remedies set forth in Section 16.10 hereto.


 


13.2        Publisher’s Confidential Information.


 


13.2.1     Definition of Publisher’s Confidential Information.  “Publisher’s Confidential Information” shall
mean:


 


(i)            any
Product Software as provided to SCEA pursuant to this Agreement and all
documentation and information relating thereto, including Product Proposals,
Printed Materials and Advertising Materials (other than


 


 


17





















 


documentation and information intended for use by and release to end
users, the general public or the trade);


 


(ii)           other
documents and materials developed, owned, licensed or under the control of
Publisher, including all processes, data, hardware, software, inventions, trade
secrets, ideas, creations, improvements, designs, discoveries, developments,
research and know-how; and


 


(iii)          information
and documents regarding Publisher’s finances, business, marketing and technical
plans, business methods and production plans.


 


Publisher’s Confidential
Information may consist of information in any medium, whether oral, printed, in
machine-readable form or otherwise, including information apprised to SCEA and
reduced to tangible or written form at any time during the term of this Agreement.


 


13.2.2     Term of Protection of Publisher’s Confidential
Information.  The term for
the protection of Publisher’s Confidential Information shall commence on the
Effective Date first above written and shall continue in full force and effect
as long as any of Publisher’s Confidential Information continues to be
maintained as confidential and proprietary by Publisher.


 


13.2.3     Preservation of Confidential Information of
Publisher.  SCEA shall,
with respect to Publisher’s Confidential Information:


 


(i)            hold all
Publisher’s Confidential Information in confidence, and shall take all
reasonable steps to preserve the confidentiality of Publisher’s Confidential
Information, and to prevent it from falling into the public domain or into the
possession of persons other than those persons to whom disclosure is authorized
hereunder.


 


(ii)           not
disclose Publisher’s Confidential Information to any person other than an SCEA
employee or subcontractor who needs to know or have access to such Confidential
Information for the purposes of this Agreement, and only to the extent
necessary for such purposes.


 


(iii)          ensure
that all written materials relating to or containing Publisher’s Confidential
Information be maintained in a secure area and plainly marked to indicate the
secret and confidential nature thereof.


 


(iv)          at
Publisher’s request, return promptly to Publisher any and all portions of
Publisher’s Confidential Information, together with all copies thereof.


 


(v)           not use
Publisher’s Confidential Information, or any portion thereof, except as
provided herein, nor shall SCEA remove any proprietary legend set forth on or
contained within any of Publisher’s Confidential Information.


 


13.2.4     Exceptions.  The foregoing restrictions will not apply
to any portion of Publisher’s Confidential Information which:


 


(i)            was
previously known to SCEA without restriction on disclosure or use, as proven by
written documentation of SCEA; or


 


(ii)           is or
legitimately becomes part of information in the public domain through no fault
of SCEA, its employees or its subcontractors; or


 


(iii)          is
independently developed by SCEA’s employees or affiliates who have not had
access to Publisher’s Confidential Information, as proven by written
documentation of SCEA; or


 


(iv)          is required
to be disclosed by administrative or judicial action; provided that SCEA
attempted to maintain the confidentiality of Publisher’s Confidential
Information by asserting in such action the restrictions set forth in this
Agreement, and immediately after receiving notice of such action, notified
Publisher of such action to give Publisher the opportunity to seek any other
legal remedies to maintain such Publisher’s Confidential Information in
confidence as herein provided; or


 


(vi)          is
approved for release by written authorization of Publisher.


 


13.2.5     SCEA’s Obligations Upon Unauthorized Disclosure.  If at any time SCEA becomes aware of any
unauthorized duplication, access, use, possession or knowledge of any of
Publisher’s Confidential Information, it shall notify Publisher as soon as is
reasonably practicable.  SCEA shall
provide any and all reasonable assistance to Publisher to protect Publisher’s
proprietary rights in any of Publisher’s Confidential Information that may have
directly or indirectly disclosed by an SCEA employee and that may be
duplicated, accessed, used, possessed or known in a manner or for a purpose not
expressly authorized by this Agreement. 
SCEA shall take all reasonable steps requested by Publisher to prevent
the recurrence of any unauthorized duplication, access, use, possession or
knowledge of Publisher’s Confidential Information.


 


13.3        Confidentiality of Agreement.  The terms and conditions of this Agreement
shall be treated as SCEA’s Confidential Information and Publisher’s
Confidential Information; provided that each party may disclose the terms and
conditions of this Agreement:


 


(i)            to legal
counsel;


 


(ii)           in
confidence, to accountants, banks and financing sources and their advisors;


 


(iii)          in
confidence, in connection with the enforcement of this Agreement or rights
arising under or relating to this Agreement; and


 


 


18





















 


(iv)          if
required, in the opinion of counsel, to file publicly or otherwise disclose the
terms of this Agreement under applicable federal or state securities or other
laws, the disclosing party shall be required to promptly notify the other party
such that the other party has a reasonable opportunity to contest or limit the
scope of such required disclosure, and the disclosing party shall request, and
shall use its best efforts to obtain, confidential treatment for such sections
of this Agreement as the other party may designate.


 


14.          Term and
Termination.


 


14.1        Effective Date; Term.  This Agreement shall not be binding on the
parties until it has been signed by each party, in which event it shall be
effective from the Effective Date until March 31, 2007, unless earlier
terminated pursuant to Section 14.2. The term shall be automatically extended
for additional one-year terms thereafter, unless either party provides the
other with written notice of its election not to so extend on or before January
31 of the applicable year. Notwithstanding the foregoing the term for the
protection of SCEA’s Confidential Information and Publisher’s Confidential
Information shall be as set forth in Sections 13.1.2 and 13.2.2 respectively.


 


14.2        Termination by SCEA.  SCEA shall have the right to terminate this
Agreement immediately, by providing written notice of such election to
Publisher, upon the occurrence of any of the following:


 


(i)            If
Publisher breaches (A) any of its obligations; or (B) any other agreement
entered into between SCEA or Affiliates of SCEA and Publisher.


 


(ii)           The
liquidation or dissolution of Publisher or a statement of intent by Publisher
to no longer exercise any of the rights granted by SCEA to Publisher.


 


(iii)          If
during the term of this Agreement, a controlling interest in Publisher or in an
entity which directly or indirectly has a controlling interest in Publisher is
transferred to a party that (A) is in breach of any agreement with SCEA or an
Affiliate of SCEA; (B) directly or indirectly holds or acquires a controlling
interest in a third party which develops any interactive device or product
which is directly or indirectly competitive with the PSP Player; or (C) is in
litigation with SCEA or Affiliates of SCEA concerning any proprietary
technology, trade secrets or other SCEA Intellectual Property Rights or SCEA’s
Confidential Information.  As used in
this Section 14.2, “controlling interest” means, with respect to any form of
entity, sufficient power to control the decisions of such entity.


 


(iv)          If
during the term of this Agreement, Publisher or an entity that directly or
indirectly has a controlling interest in Publisher enters into a business
relationship with a third party with whom Publisher materially contributes to
develop core components to an interactive device or product which is directly
or indirectly competitive with the PSP Player.


 


(v)           Publisher
files or causes to file litigation against SCEA or any SCE Affiliate.


 


Publisher shall
immediately notify SCEA in writing in the event that any of the events or
circumstances specified in this Section occur.


 


14.3        Product-by-Product Termination by SCEA.  In addition to the events of termination
described in Section 14.2, above, SCEA, at its option, shall be entitled to
terminate, on a product-by-product basis, the licenses and related rights
herein granted to Publisher in the event that (a) Publisher fails to notify
SCEA promptly in writing of any material change to any materials previously
approved by SCEA in accordance with Section 5 or Section 6.1 hereto, and such
breach is not corrected or cured within thirty (30) days after receipt of
written notice of such breach; (b) Publisher uses a third party that fails to
comply with the requirements of Section 3 in connection with the development of
any Licensed PSP Product; (c) 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 Licensed PSP Product; or (d) Publisher cancels a Licensed PSP
Product or fails to provide SCEA in accordance with the provisions of Section 5
above, with the final version of the Executable Software for any Licensed PSP
Product within three (3) months of the scheduled release date according to the
Product Proposal (unless a modified final delivery date has been agreed to by
the parties), or fails to provide work in progress to SCEA in strict accordance
with the Review Process in Section 5.3.


 


14.4        Options of SCEA in Lieu of Termination.  As alternatives to terminating this Agreement
or a particular Licensed PSP Product as set forth in Sections 14.2 and 14.3
above, SCEA may, at its option and upon written notice to Publisher, take the
following actions.  In the event that
SCEA elects either of these options, Publisher may terminate this Agreement
upon written notice to SCEA rather than allowing SCEA to exercise these
options.  Election of these options by
SCEA shall not constitute a waiver of or compromise with respect to any of SCEA’s
rights under this Agreement and SCEA may elect to terminate this Agreement with
respect to any breach.


 


14.4.1     Suspension of Agreement.  SCEA may suspend this Agreement, entirely or
with respect to a particular Licensed PSP 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.


 


 


19





















 


14.4.2     Liquidated Damages.  Whereas a minor breach of any of the events
set out below may not warrant termination of this Agreement, but will cause
SCEA damages in amounts difficult to quantify, SCEA may require Publisher to
pay liquidated damages of Twenty Thousand Dollars ($20,000) per event as
follows:


 


(i)            Failure
to submit Advertising Materials to SCEA for approval (including any required
resubmissions);


 


(ii)           Broadcasting
or publishing Advertising Materials without receiving the final approval or
consent of SCEA;


 


(iii)          Failure
to make SCEA’s requested revisions to Advertising Materials; or


 


(iv)          Failure
to comply with the PSP SourceBook, Manufacturing Specifications or Guidelines
which relates in any way to use of Licensed Trademarks.


 


(v)           any
transshipment or attempted transshipment of Licensed Products into unlicensed
territories, whether willfully or negligently, without the expressed written
permission of the regional SCE Affiliate, 
in an amount that SCEA deems in sole discretion not to be a material
breach of this Agreement.


 


Liquidated damages shall
be invoiced separately or on Publisher’s next invoice for Licensed PSP
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.


 


14.5        No Refunds.  In the event of the termination of this
Agreement in accordance with any of the provisions of Sections 14.2 through
14.4 above, no portion of any payments of any kind whatsoever previously
provided to SCEA hereunder shall be owed or be repayable to Publisher.


 


15.          Effect of Expiration or Termination.


 


15.1        Inventory Statement.  Within thirty (30) days of the date of
expiration or the effective date of termination with respect to any or all
Licensed PSP Products or this Agreement, Publisher shall provide SCEA with an
itemized statement, certified to be accurate by an officer of Publisher,
specifying the number of unsold Units of the Licensed PSP Products as to which
such termination applies, on a title-by-title basis, which remain in its
inventory or under its control at the time of expiration or the effective date
of termination.  SCEA shall be entitled
to conduct at its expense a physical inspection of Publisher’s inventory and
work in process upon reasonable written notice during normal business hours in
order to ascertain or verify such inventory and inventory statement.


 


15.2        Reversion of Rights.  Upon expiration or termination and subject to
Section 15.3 below, the licenses and related rights herein granted to Publisher
shall immediately revert to SCEA, and Publisher shall cease from any further
use of SCEA’s Confidential Information, Licensed Trademarks and SCE Materials
and any SCEA Intellectual Property Rights therein, and, subject to the
provisions of Section 15.3 below, Publisher shall have no further right to
continue the development, publication, manufacture, marketing, sale or
distribution of any Units of the Licensed PSP Products, or to continue to use
any Licensed Trademarks; provided, however, that for a period of one year after
termination, and subject to all the terms of Section 13, and provided this
Agreement is not terminated due to a breach or default of Publisher, Publisher
may retain such portions of SCE Materials and SCEA’s Confidential Information
as SCEA in its sole discretion agrees are required to support end users of
Licensed PSP Products but must return these materials at the end of such one
year period.  Upon expiration or termination,
the licenses and related rights herein granted to SCEA by Publisher shall
immediately revert to Publisher, and SCEA shall cease from any further use of
Product Information and any Publisher Intellectual Property Rights therein;
provided that SCEA may continue the manufacture, marketing, sale or
distribution of any SCEA Demo Discs containing Publisher’s Product Information
which Publisher had approved prior to termination.


 


15.3        Disposal of Unsold Units.  Provided that this Agreement is not
terminated due to a breach or default of Publisher, Publisher may, upon
expiration or termination of this Agreement, sell off existing inventories of
Licensed PSP 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 PSP 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 PSP Products which have been destroyed (on a title-by-title
basis), the location and date of such destruction and the disposition of the
remains of such destroyed materials.


 


15.4        Return of SCE 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 SCE Materials and any and all copies thereof, and Publisher and SCEA shall,
upon the request of the other party, immediately deliver to the other party, or
if and to the extent requested by such party destroy, all Confidential
Information of the other party, including any and all copies thereof, which the
other party previously furnished to it in furtherance of this Agreement.  Within five (5) working days after any such
destruction, Publisher or SCEA, as


 


 


20





















 


appropriate, shall provide the other party with an affidavit of
destruction and an itemized statement, each certified to be accurate by an
officer of Publisher, indicating the number of copies and units of the SCE
Materials and Confidential Information which have been destroyed, the location
and date of such destruction and the disposition of the remains of such
destroyed materials.  In the event that
Publisher fails to return the SCE Materials or Confidential Information and
SCEA must resort to legal means including without limitation any use of
attorneys to recover the SCE Materials or Confidential Information or the value
thereof, all costs, including SCEA’s reasonable attorney’s fees, shall be borne
by Publisher, and SCEA may, in addition to SCEA’s other remedies, withhold such
amounts from any payment otherwise due from SCEA to Publisher under any
agreement between SCEA and Publisher.


 


15.5        Extension of this Agreement; Termination Without
Prejudice.  SCEA shall be
under no obligation to extend this Agreement notwithstanding any actions taken
by either of the parties prior to the expiration of this Agreement. Upon the
expiration of this Agreement, neither party shall be liable to the other for
any damages (whether direct, indirect, consequential or incidental, and
including, without limitation, any expenditures, loss of profits or prospective
profits) sustained or arising out of or alleged to have been sustained or to
have arisen out of such expiration.  The
expiration or termination of this Agreement shall be without prejudice to any
rights or remedies which one party may otherwise have against the other party,
and shall not excuse either party from any such expiration or termination.


 


16.          Miscellaneous
Provisions.


 


16.1        Notices.  All notices or other communications required
or desired to be sent to either of the parties shall be in writing and shall be
sent by registered or certified mail, postage prepaid, or sent by recognized
international courier service, telegram or facsimile, with charges prepaid. The
address for all notices or other communications required to be sent to SCEA or
Publisher, respectively, shall be the mailing address stated in the preamble
hereof, or such other address as may be provided by written notice from one
party to the other on at least ten (10) days’ prior written notice. Any such
notice shall be effective upon the date of actual or tendered delivery, as
confirmed by the sending party.


 


16.2        Audit Provisions.  Publisher
shall keep full, complete, and accurate books of account and records covering
all transactions relating to this Agreement. 
Publisher shall preserve such books of account, records, documents and
material for a period of twenty-four (24) months after the expiration or earlier
termination of this Agreement. 
Acceptance by SCEA of an accounting statement, purchase order, or
payment hereunder will not preclude SCEA from challenging or questioning the
accuracy thereof at a later time.  In the
event that SCEA reasonably believes that the Wholesale Price provided by
Publisher with respect to any Licensed PSP Product is not accurate, SCEA shall
be entitled to request additional documentation from Publisher to support the
listed Wholesale Price for such Licensed PSP Product.  In addition, during the Term and for a period
of two (2) years thereafter and upon the giving of reasonable written notice to
Publisher, representatives of SCEA shall have access to, and the right to make
copies and summaries of, such portions of all of Publisher’s books and records
as pertain to the Licensed PSP Products and any payments due or credits
received hereunder.  In the event that
such inspection reveals an under-reporting of any payment due to SCEA,
Publisher shall immediately pay SCEA such amount.  In the event that any audit conducted by SCEA
reveals that Publisher has under-reported any payment due to SCEA hereunder by
five percent (5%) or more for that audit period, then in addition to the
payment of the appropriate amount due to SCEA, Publisher shall reimburse SCEA
for all reasonable audit costs for that audit and any and all collection costs
to recover the unpaid amount.


 


16.3        Force Majeure.  Neither SCEA nor Publisher shall be liable
for any loss or damage or be deemed to be in breach of this Agreement if its
failure to perform or failure to cure any of its obligations under this
Agreement results from any event or circumstance beyond its reasonable control,
including, without limitation, any natural disaster, 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; provided, however, that the
party interfered with gives the other party written notice thereof promptly,
and, in any event, within fifteen (15) business days of discovery of any such
Force Majeure condition. If notice of the existence of any Force Majeure
condition is provided within such period, the time for performance or cure
shall be extended for a period equal to the duration of the Force Majeure event
or circumstance described in such notice, except that any such cause shall not
excuse the payment of any sums owed to SCEA prior to, during or after any such
Force Majeure condition.  In the event
that the Force Majeure condition continues for more than sixty (60) days, SCEA
may terminate this Agreement for cause by providing written notice to Publisher
to such effect.


 


16.4        No Agency, Partnership or Joint Venture.  The relationship between SCEA and Publisher,
respectively, is that of licensor and licensee. Both parties are independent
contractors and are not the legal representative, agent, joint venturer,
partner or employee of the other party for any purpose whatsoever. Neither
party has any right or authority to assume or create any obligations of any
kind or to make any representation or warranty on behalf of the other party,
whether express or implied, or to bind the other party in any respect
whatsoever.


 


 


21





















 


16.5        Assignment.  SCEA has entered into this Agreement based
upon the particular reputation, capabilities and experience of Publisher and
its officers, directors and employees. Accordingly, Publisher may not assign
this Agreement or any of its rights hereunder, nor delegate or otherwise
transfer any of its obligations hereunder, to any third party unless the prior
written consent of SCEA shall first be obtained.  This Agreement shall not be assigned in
contravention of Section 14.2 (iii).  Any
attempted or purported assignment, delegation or other such transfer, directly
or indirectly, without the required consent of SCEA shall be void. Subject to
the foregoing, this Agreement shall inure to the benefit of the parties and
their respective successors and permitted assigns (other than under the
conditions set forth in Section 14.2 (iii). 
SCEA shall have the right to assign any and all of its rights and
obligations hereunder to any Sony affiliate(s).


 


16.6        Subcontractors.  Publisher shall not sell, assign, delegate,
subcontract, sublicense or otherwise transfer or encumber all or any portion of
the licenses herein granted without the prior written approval of SCEA,
provided, however, that Publisher may retain those subcontractors who provide
services which do not require access to SCE Materials or SCEA’s Confidential
Information without such prior approval. 
Publisher may retain those subcontractor(s) to assist with the
development, publication and marketing of Licensed PSP Products (or portions
thereof) which have signed (i) an PSP LPA or PSP LDA with SCEA (the “PSP
Agreement”) in full force and effect throughout the term of such development
and marketing; or (ii) an SCEA-approved subcontractor agreement (“Subcontractor
Agreement”); and SCEA has approved such subcontractor in writing, which
approval shall be in SCEA’s sole discretion. 
Such Subcontractor Agreement shall provide that SCEA is a third-party
beneficiary of such Subcontractor Agreement and has the full right to bring any
actions against such subcontractors to comply in all respects with the terms
and conditions of this Agreement. 
Publisher shall provide a copy of any such Subcontractor Agreement to
SCEA prior to and following execution thereof. 
Publisher shall not disclose to any subcontractor any of SCEA’s
Confidential Information, including, without limitation, any SCE Materials,
unless and until either a PSP Agreement or a Subcontractor Agreement has been
executed and approved by SCEA. 
Notwithstanding any consent which may be granted by SCEA for Publisher
to employ any such permitted subcontractor(s), or any such separate
agreement(s) that may be entered into by Publisher with any such permitted
subcontractor, Publisher shall remain fully liable for its compliance with all
of the provisions of this Agreement and for the compliance of any and all
permitted subcontractors with the provisions of any agreements entered into by
such subcontractors in accordance with this Section. Publisher shall use its
best efforts to cause its subcontractors retained in furtherance of this
Agreement to comply in all respects with the terms and conditions of this
Agreement, and hereby unconditionally guarantees all obligations of its
subcontractors.  SCEA may subcontract any
of its rights or obligations hereunder.


 


16.7        Compliance with Applicable Laws.  The parties shall at all times comply with
all applicable regulations and orders of their respective countries and other
controlling jurisdictions and all conventions and treaties to which their
countries are a party or relating to or in any 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).


 


16.8        Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California, excluding
that body of law related to choice of laws, and of the United States of
America. Any action or proceeding brought to enforce the terms of this
Agreement or to adjudicate any dispute arising hereunder shall be brought in
the Superior Court of the County of San Mateo, State of California or the
United States District Court for the Northern District of California. Each of
the parties hereby submits itself to the exclusive jurisdiction and venue 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 16.1 above.  In addition, each party hereby waives the
right to a jury trial in any action or proceeding related to this Agreement.


 


16.9        Legal Costs and Expenses.  In the event it is necessary for either party
to retain the services of an attorney or attorneys to enforce the terms of this
Agreement or to file or defend any action arising out of this Agreement, then
the prevailing party in any such action shall be entitled, in addition to any
other rights and remedies available to it at law or in equity to recover from
the other party its reasonable fees for attorneys and expert witnesses, plus
such court costs and expenses as may be fixed by any court of competent
jurisdiction.  The term “prevailing party”
for the purposes of this Section shall include a defendant who has by motion,
judgment, verdict or dismissal by the court, successfully defended against any
claim that has been asserted against it.


 


16.10      Remedies.  Unless expressly set forth to the contrary,
either party’s election of any remedies provided for in this Agreement shall
not be exclusive of any other remedies, and all such remedies shall be deemed
to be cumulative.  Any breach of Sections
3, 4, 5, 6.1, 11 and 13 of this Agreement would cause significant and
irreparable harm to SCEA, the extent of which would be difficult to
ascertain.  Accordingly, in addition to
any other remedies including without limitation equitable relief to which SCEA
may be entitled, in the event of a breach by Publisher or any of its employees
or permitted subcontractors of any such Sections of this Agreement, SCEA shall
be entitled to the immediate issuance without


 


 


22





















 


bond of ex parte injunctive relief or, if a bond is required under
applicable law, on the posting of a bond in an amount not to exceed $50,000,
enjoining any breach or threatened breach of any or all of such
provisions.  In addition, if Publisher
fails to comply with any of its obligations as set forth herein, SCEA shall be
entitled to an accounting and repayment of all forms of compensation,
commissions, remuneration or benefits which Publisher directly or indirectly
realizes as a result of or arising in connection with any such failure to
comply.  Such remedy shall be in addition
to and not in limitation of any injunctive relief or other remedies to which
SCEA may be entitled under this Agreement or otherwise at law or in
equity.  In addition, Publisher shall
indemnify SCEA for all losses, damages, liabilities, costs and expenses
(including reasonable attorneys’ fees and all reasonable related costs) which
SCEA may sustain or incur as a result of any breach under this Agreement.


 


16.11      Severability.  In the event that any provision of this
Agreement (or portion thereof) is determined by a court of competent
jurisdiction to be invalid or otherwise unenforceable, such provision (or
portion thereof) shall be enforced to the extent possible consistent with the
stated intention of the parties, or, if incapable of such enforcement, shall be
deemed to be deleted from this Agreement, while the remainder of this Agreement
shall continue in full force and remain in effect according to its stated terms
and conditions.


 


16.12      Sections Surviving Expiration or Termination.  The following sections shall survive the
expiration or earlier termination of this Agreement for any reason: 4, 5.8,
6.2, 6.4, 8, 9, 10, 11, 13, 14.5, 15, and 16.


 


16.13      Waiver.  No failure or delay by either party in
exercising any right, power or remedy under this Agreement shall operate as a
waiver of any such right, power or remedy. No waiver of any provision of this
Agreement shall be effective unless in writing and signed by the party against
whom such waiver is sought to be enforced. Any waiver by either party of any
provision of this Agreement shall not be construed as a waiver of any other
provision of this Agreement, nor shall such waiver operate or be construed as a
waiver of such provision respecting any future event or circumstance.


 


16.14      Modification and Amendment.  No modification or amendment of any provision
of this Agreement shall be effective unless in writing and signed by both of
the parties.  Notwithstanding the
foregoing, SCEA reserves the right to modify the PSP SourceBook from time to
time upon reasonable notice to Publisher.


 


16.15      Headings.  The section headings used in this Agreement
are intended primarily for reference and shall not by themselves determine the
construction or interpretation of this Agreement or any portion hereof.


 


16.16      Integration.  This Agreement, together with the PSP
SourceBook, constitutes the entire agreement between SCEA and Publisher and
supersedes all prior or contemporaneous agreements, proposals, understandings
and communications between SCEA and Publisher, whether oral or written, with
respect to the subject matter hereof including any PSP Confidentiality and
Nondisclosure Agreement and Materials Loan Agreement between SCEA and
Publisher.


 


16.17      Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, and together shall
constitute one and the same instrument.


 


16.18      Construction.  This Agreement shall be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against either of the parties.


 


 


IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed as of the day and
year first written above.


 


	
  SONY
  COMPUTER ENTERTAINMENT AMERICA INC.

  	
   

  	
    THQ
  INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
  Andrew House

  	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  EVP
  SCEA

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NOT
  AN AGREEMENT UNTIL EXECUTED BY BOTH PARTIES

  
											



 


 


23