CONFIDENTIAL


                                                                   EXHIBIT 10.32

Confidential  information  omitted where indicated by "[*]" and filed separately
with the Securities  Exchange  Commission pursuant to a request for confidential
treatment under Rule 406 of the Securities Act of 1933.

                    SONY COMPUTER ENTERTAINMENT AMERICA INC.

                                       AND

                                 THE 3DO COMPANY

                                 PLAYSTATION(R)2

                                 CD-ROM/DVD-ROM

                          LICENSED PUBLISHER AGREEMENT

<PAGE>

                                                                    CONFIDENTIAL

                                TABLE OF CONTENTS

SECTION:                                                                   PAGE:
--------                                                                   -----

    1.  DEFINITION OF TERMS                                                   1

    2.  LICENSE GRANT                                                         3

    3.  DEVELOPMENT OF LICENSED PRODUCTS                                      3

    4.  LIMITATIONS ON LICENSES; RESERVATION OF RIGHTS                        4

    5.  QUALITY STANDARDS FOR THE LICENSED PRODUCTS                           5

    6.  MANUFACTURE OF THE LICENSED PRODUCTS                                  7

    7.  MARKETING AND DISTRIBUTION                                           10

    8.  ROYALTIES                                                            12

    9.  REPRESENTATIONS AND WARRANTIES                                       15

    10. INDEMNITIES; LIMITED LIABILITY                                       16

    11. SCEA INTELLECTUAL PROPERTY RIGHTS                                    17

    12. INFRINGEMENT OF SCEA INTELLECTUAL PROPERTY RIGHTS BY THIRD PARTIES   18

    13. CONFIDENTIALITY                                                      18

    14. TERM AND TERMINATION                                                 20

    15. EFFECT OF EXPIRATION OR TERMINATION                                  22

    16. MISCELLANEOUS PROVISIONS                                             23

<PAGE>

                                                                    CONFIDENTIAL

                                PLAYSTATION(R) 2
                                 CD-ROM/DVD-ROM
                          LICENSED PUBLISHER AGREEMENT

This LICENSED PUBLISHER AGREEMENT (the "Agreement" or "LPA"), entered into as of
the 1st day of April, 2000 (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 The 3DO Company,  with offices at 600
Galveston Drive, Redwood City, CA 94063 (hereinafter Publisher").

WHEREAS,  SCEA, its parent company,  Sony Computer  Entertainment  Inc.,  and/or
certain of their affiliates and companies within the group of companies of which
any of  them  form a part  (collectively  referred  to  herein  as  "Sony")  are
designing  and  developing,   and  licensing  core  components  of,  a  computer
entertainment system known as the PlayStation(R)2  computer entertainment system
(hereinafter referred to as the "System").

WHEREAS,  SCEA has the right to grant  licenses  to  certain  SCEA  Intellectual
Property Rights (as defined below) in connection with the System.

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

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

1.    Definition of Terms.

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

      1.2  "Affiliate  of SCEA"  means,  as  applicable,  either  Sony  Computer
Entertainment  Inc. in Japan,  Sony  Computer  Entertainment  Europe Ltd. in the
United  Kingdom  or such  other  Sony  Computer  Entertainment  entity as may be
established from time to time.

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

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

      1.5 "Development  Tools" means the PlayStation 2 development tools sold or
licensed by SCEA to a Licensed  Publisher or Licensed  Developer  for use in the
development of Executable Software for the System.

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

      1.7 "Fiscal Year" means a year measured from April 1 to March 31.

      1.8 "Generic Line" means the generic legal  attribution  line used on SCEA
marketing or other materials,  which shall be or be substantially similar to the
following:  "Product copyright and trademarks are the property of the respective
publisher or their licensors".

      1.9 "Guidelines" shall mean any guidelines of SCEA or an Affiliate of SCEA
with respect to SCEA Intellectual Property Rights, which may be set forth in the
SourceBook 2 or in other documentation  provided by SCEA or an Affiliate of SCEA
to Publisher.

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

      1.11  "Level 1 Rebate"  shall have the  meaning  set forth in Section  8.4
hereto.

      1.12  "Level 2 Rebate"  shall have the  meaning  set forth in Section  8.4
hereto.


                                       1
<PAGE>

                                                                    CONFIDENTIAL

      1.13 "Licensed  Developer" means any developer that has signed a valid and
then current Licensed Developer Agreement.

      1.14  "Licensed  Developer  Agreement"  or "LDA" means a valid and current
license agreement for the development of Licensed Products for the System, fully
executed between a Licensed Developer and SCEA or an Affiliate of SCEA.

      1.15  "Licensed  Products"  means the  Executable  Software  (which may be
combined  with  Executable  Software of other  Licensed  Publishers  or Licensed
Developers),  which shall consist of one product developed for the System or for
the  original  PlayStation  game  console  per  Unit,  in final  form  developed
exclusively  for the System.  Publisher shall have no right to package or bundle
more than one product  developed for the System or for the original  PlayStation
game console in a single Unit unless separately agreed with SCEA.

      1.16 "Licensed  Publisher" means any publisher that has signed a valid and
then current Licensed Publisher Agreement.

      1.17  "Licensed  Publisher  Agreement"  or "LPA" means a valid and current
license  agreement for the  publication,  development,  manufacture,  marketing,
distribution  and sale of  Licensed  Products  for the  System,  fully  executed
between a Licensed Publisher and SCEA or an Affiliate of SCEA.

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

      1.19 "Licensed  Trademarks"  means the  trademarks,  service marks,  trade
dress,  logos and other icons or indicia  designated by SCEA in the SourceBook 2
or other Guidelines for use on or in connection with Licensed Products.  Nothing
contained in this  Agreement  shall in any 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  SourceBook 2 or other  Guidelines or upon written notice to
Publisher.

      1.20 "Manufacturing  Specifications"  means  specifications  setting forth
terms  relating to the  manufacture  and assembly of PlayStation 2 Format Discs,
Packaging,  Printed Materials and each of their component parts,  which shall be
set  forth in the  SourceBook  2 or other  documentation  provided  by SCEA or a
Designated  Manufacturing  Facility to  Publisher  and which may be amended from
time to time upon reasonable notice to Publisher.

      1.21 "Master  Disc" means a recordable  CD-ROM or DVD-ROM disc in the form
requested by SCEA  containing  final  pre-production  Executable  Software for a
Licensed Product.

      1.22 "Packaging" means, with respect to each Licensed Product, the carton,
containers, packaging, edge labels and other proprietary labels, trade dress and
wrapping  materials,  including  any  jewel  case (or other  CD-ROM  or  DVD-ROM
container) or parts thereof,  but excluding  Printed Materials and PlayStation 2
Format Discs.

      1.23  "PlayStation  2 Format  Discs" means the uniquely  marked or colored
CD-ROM or DVD-ROM discs formatted for use with the System which, for purposes of
this Agreement,  are  manufactured  on behalf of Publisher and contain  Licensed
Products or SCEA Demo Discs.

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

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

      1.26 "Product  Proposal" shall have the meaning set forth in Section 5.2.1
hereto.

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

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

      1.29  "Purchase  Order"  means  a  written  purchase  order  processed  in
accordance   with  the  terms  of  Section  6.2.2  hereto,   the   Manufacturing
Specifications or other


                                       2
<PAGE>

                                                                    CONFIDENTIAL

terms  provided  separately  by SCEA or a Designated  Manufacturing  Facility to
Publisher.

      1.30  "SCEA  Demo  Disc"  means  any  demonstration   disc  developed  and
distributed by SCEA.

      1.31  "SCEA  Established  Third  Party Demo Disc  Programs"  means (i) any
consumer or trade  demonstration disc program specified in the SourceBook 2, and
(ii) any other third party demo disc  program  established  by SCEA for Licensed
Publishers.

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

      1.33 "SCEA Product Code" means the product  identification number assigned
to each Licensed Product, which shall consist of separate product identification
numbers for  multiple  disc sets (i.e.,  SLUS-xxxxx).  This SCEA Product Code is
used on the Packaging and PlayStation Disc relating to each Licensed Product, as
well  as on  most  communications  between  SCEA  and  Publisher  as a  mode  of
identifying the Licensed Product other than by title.

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

      1.35  "SourceBook  2" means the  PlayStation  2  SourceBook  (or any other
reference  guide  containing   information  similar  to  the  SourceBook  2  but
designated with a different name) prepared by SCEA, which is provided separately
to  Publisher.  The  SourceBook  2 is  designed  to serve as the first  point of
reference by Publisher in every phase of the development,  approval, manufacture
and marketing of Licensed Products.

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

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

      1.38  "Unit"  means  an  individual  copy  of  a  Licensed  Product  title
regardless  of the  number  of  PlayStation  2 Format  Discs  constituting  such
Licensed Product title.

      1.39  "Wholesale  Price" or "WSP"  shall mean the greater of (i) the first
published  price of the  Licensed  Product  offered to retailers by Publisher as
evidenced by a sell sheet or price list issued by Publisher,  or (ii) the actual
price paid by retailers upon the first commercial shipment of a Licensed Product
without offsets, rebates or deductions from invoices of any kind.

2.   License.

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

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

3.   Development of Licensed Products.

      3.1 Right to  Develop.  This LPA  grants  Publisher  the right to  develop
Licensed Products.  It also gives Publisher the right to purchase and/or license
Development  Tools,  as is  appropriate,  from  SCEA  or its  designated  agent,
pursuant to a separate Development System Agreement with SCEA, to assist in such
development. In developing Executable Software (or portions thereof),


                                       3
<PAGE>

                                                                    CONFIDENTIAL

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

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

4.   Limitations on Licenses; Reservation of Rights.

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

      4.2 Reservation of SCEA's Rights.

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

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

      4.3  Reservation  of  Publisher's  Rights.  Separate  and apart  from Sony
Materials and other rights licensed to Publisher by SCEA  hereunder,  as between
Publisher and SCEA,  Publisher retains all rights,  title and interest in and to
the Product Software,  and the Product Proposals and Product Information related
thereto,  including without limitation  Publisher  Intellectual  Property Rights
therein,


                                       4
<PAGE>

                                                                    CONFIDENTIAL

as well as Publisher's  rights in any source code and other underlying  material
such as  artwork  and music  related  thereto  and any names  used as titles for
Licensed  Products  and other  trademarks  used by  Publisher.  Nothing  in this
Agreement  shall be  construed  to restrict  the right of  Publisher to develop,
distribute  or transmit  products  incorporating  the Product  Software and such
underlying  material  (separate  and  apart  from  the Sony  Materials)  for any
hardware  platform or service other than the System, or to use Printed Materials
or Advertising Materials approved by SCEA as provided herein (provided that such
Printed  Materials  and/or  Advertising  Materials  do not contain any  Licensed
Trademarks) as Publisher determines for such other platforms.  SCEA shall not do
or cause to be done any act or thing in any 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 System via  electronic
means or any other  means  now known or  hereafter  devised,  including  without
limitation,  via wireless,  cable, fiber optic means, telephone lines, microwave
and/or radio waves, or other a network of computers or other devices,  except as
otherwise permitted in Section 4.2.1 hereto.

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

      4.5 SourceBook 2 Requirement.  Publisher  shall be required to comply with
all the  provisions  of the  SourceBook  2,  including  without  limitation  the
Technical   Requirements   Checklist  therein,  when  published,   or  within  a
commercially  reasonable  time following its  publication  to  incorporate  such
provisions, as if such provisions were set forth in this Agreement.

5.   Quality Standards for the Licensed Products.

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

     5.2 Product Proposals.

         5.2.1  Submission of Product  Proposal.  Publisher shall submit to SCEA
for SCEA's  written  approval or  disapproval,  which shall not be  unreasonably
withheld or delayed, a written proposal (the "Product  Proposal").  Such Product
Proposal must contain all information  specified in the SourceBook 2, as well as
any  additional  information  that SCEA may deem to be useful in evaluating  the
proposed Licensed Product.

         5.2.2 Approval of Product Proposal.  After SCEA's review of Publisher's
Product Proposal,  Publisher will receive written notice from SCEA of the status
of the Product Proposal, which may range from "Approved" to "Not Approved." Such
conditions shall have the meanings ascribed to them in the SourceBook 2, and may
be changed from time to time by SCEA. If a Product  Proposal is "Not  Approved",
then neither  Publisher nor any other Licensed  Developer or Licensed  Publisher
may re-submit such Product Proposal without significant,  substantive revisions.
SCEA shall have no  obligation  to approve any  Product  Proposal  submitted  by
Publisher. Any development conducted by or at the direction of Publisher and any
legal  commitment  relating  to  development  work shall be at  Publisher's  own
financial  and  commercial  risk.  Publisher  shall not  construe  approval of a
Product  Proposal  as a  commitment  by SCEA to  grant  final  approval  to such
Licensed   Product.   Nothing  herein  shall  restrict  SCEA  from  commercially
exploiting any coincidentally  similar concept(s) and/or product(s),  which have
been independently developed by SCEA, an Affiliate of SCEA or any third party.

         5.2.3 Changes to Product Proposal. Publisher shall notify SCEA promptly
in writing in the event of any  material  proposed  change in any portion of the
Product  Proposal.  SCEA's  approval of a Product  Proposal  shall not  obligate
Publisher to continue with  development  or production of the proposed  Licensed
Product,  provided that Publisher must immediately  notify SCEA in writing if it
discontinues,  cancels or otherwise delays past the original  scheduled delivery
date the  development  of any  proposed  Licensed  Product.  In the  event  that
Publisher  licenses a proposed Licensed Product from another Licensed  Publisher
or a Licensed  Developer,  it shall  immediately


                                       5
<PAGE>

                                                                    CONFIDENTIAL

notify SCEA of such change and must re-submit such Licensed  Product to SCEA for
approval in accordance with the provisions of Section 5.2.1 above.

      5.3 Work-in-Progress.

         5.3.1  Submission  and Review of  Work-in-Progress.  SCEA shall require
Publisher  to submit to SCEA  work-in-progress  on Licensed  Products at certain
intervals throughout their development and, upon written notice to Publisher, at
any time during the development process.  Upon approval of the Product Proposal,
Publisher  must,  within  the  time  frame  indicated  in the  approval  letter,
communicate  with SCEA and mutually  agree on a framework for the review of such
Licensed Product throughout the development process ("Review Process"). Once the
Review  Process  has  begun,  Publisher  shall  be  responsible  for  submitting
work-in-progress  to SCEA in  accordance  with such Review  Process.  Failure to
submit  work-in-progress in accordance with any stage of the Review Process may,
at SCEA's discretion, result in revocation of approval of such Product Proposal.

         5.3.2  Approval  of Work in  Progress.  SCEA  shall  have the  right to
approve,  reject or require additional information with respect to each stage of
the Review  Process.  SCEA shall  specify in writing  the  reasons  for any such
rejection or request for additional information and shall state what corrections
and/or  improvements  are  necessary.  If any stage of the Review Process is not
provided  to SCEA or is not  successfully  met after a  reasonable  cure  period
agreed to between  SCEA and  Publisher,  SCEA shall have the right to revoke the
approval of Publisher's Product Proposal.

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

      5.4 Approval of Executable  Software.  On or before the date  specified in
the Product  Proposal or 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 Product.  SCEA will
evaluate  such  Executable  Software  and  notify  Publisher  in  writing of its
approval or disapproval, which shall not be unreasonably withheld or delayed. If
such  Executable  Software  is  disapproved,  SCEA shall  specify in writing the
reasons for such  disapproval and state what  corrections and  improvements  are
necessary.  After making the necessary  corrections and improvements,  Publisher
shall submit a new version of such Executable Software for SCEA's approval. SCEA
shall have the right to  disapprove  Executable  Software  if it fails to comply
with SCEA's  corrections or  improvements or one or more conditions as set forth
in the  SourceBook 2 with no obligation to review all elements of any version of
Executable  Software.  All  final  versions  of  Executable  Software  shall  be
submitted  in the format  prescribed  by SCEA and shall  include  such number of
Master  Discs as SCEA  may  require  from  time to time.  Publisher  hereby  (i)
warrants that all final versions of Executable  Software are fully tested;  (ii)
shall use its best efforts to ensure such Executable  Software is fully debugged
prior to submission to SCEA;  and (iii) warrants that all versions of Executable
Software  comply or will comply with  standards set forth in the SourceBook 2 or
other  documentation  provided  by SCEA to  Publisher.  In  addition,  prior  to
manufacture of Executable  Software,  Publisher must sign an accountability form
stating that (x) Publisher approves the release of such Executable  Software for
manufacture in its current form and (y) Publisher shall be fully responsible for
any problems related to such Executable Software.

      5.5 Printed Materials.

         5.5.1 Compliance with Guidelines.  For each proposed  Licensed Product,
Publisher  shall be  responsible,  at  Publisher's  expense,  for  creating  and
developing  Printed  Materials.  All  Printed  Materials  shall  comply with the
Guidelines,  which may be amended  from time to time,  provided  that  Publisher
shall,  except as  otherwise  provided  herein,  only be required  to  implement
amended  Guidelines in subsequent  orders of Printed  Materials and shall not be
required to recall or destroy previously manufactured Printed Materials,  unless
such  Printed  Materials  do not comply with the  original  requirements  in the
Guidelines or unless explicitly required to do so in writing by SCEA.

         5.5.2  Submission  and  Approval  of Printed  Materials.  No later than
submission  of  final  Executable  Software  for a  proposed  Licensed  Product,
Publisher  shall also deliver to SCEA, for review and  evaluation,  the proposed
final Printed Materials and a form of limited warranty for the proposed Licensed
Product.  Failure to meet any scheduled  release dates for a Licensed Product is
solely  the  risk  and   responsibility  of  Publisher,   and  SCEA  assumes  no
responsibility for Publisher failing to meet such scheduled release dates due to
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


                                       6
<PAGE>

                                                                    CONFIDENTIAL

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  Product,  Publisher  shall be required to deliver to SCEA an
accountability  form stating that all  Advertising  Materials  for such Licensed
Product  comply  or will  comply  with the  Guidelines  for use of the  Licensed
Trademarks.   After  making  the  necessary   corrections  to  any   disapproved
Advertising Materials,  Publisher must submit new proposed Advertising Materials
for approval by SCEA.

         5.6.2 Failure to Comply; Three Strikes Program.  Publishers who fail to
obtain  SCEA's   approval  of  Advertising   Materials  prior  to  broadcast  or
publication  shall be subject to the provisions of the "Three  Strikes"  program
outlined in the  SourceBook 2. Failure to obtain SCEA's  approval of Advertising
Materials  could result in termination of this LPA or termination of approval of
the Licensed  Product,  or could subject  Publisher to the provisions of Section
14.4  hereto.  Failure  to meet any  scheduled  release  dates  for  Advertising
Materials is solely the risk and  responsibility of Publisher,  and SCEA assumes
no responsibility for Publisher failing to meet such scheduled release dates due
to approval requirements as set forth in this Section.

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

      5.7 Rating  Requirements.  If required by SCEA or any governmental entity,
Publisher  shall submit each  Licensed  Product to a consumer  advisory  ratings
system  designated  by SCEA and/or such  governmental  entity for the purpose of
obtaining  rating  code(s)  for each  Licensed  Product.  Any and all  costs and
expenses  incurred in connection  with  obtaining  such rating  code(s) shall be
borne  solely by  Publisher.  Any  required  consumer  advisory  rating  code(s)
procured hereby shall be displayed on the Licensed Product and in the associated
Printed Materials and Advertising Materials, at Publisher's cost and expense, in
accordance  with the  SourceBook  2 or other  documentation  provided by SCEA to
Publisher.

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

6.    Manufacture of the Licensed Products.

      6.1  Manufacture  of Units.  Upon  approval  of  Executable  Software  and
associated  Printed  Materials  pursuant  to Section 5, and  subject to Sections
6.1.2,  6.1.3 and 6.1.4 below,  the Designated  Manufacturing  Facility will, in
accordance  with the terms and  conditions  set forth in this  Section 6, and at
Publisher's  expense (a)  manufacture  PlayStation 2 Format Discs for Publisher;
(b)  manufacture  Publisher's  Packaging  and/or Printed  Materials;  and/or (c)
assemble  the  PlayStation  2 Format  Discs with the Printed  Materials  and the
Packaging.  Publisher shall comply with all Manufacturing Specifications related
to the particular  terms set forth herein.  SCEA reserves the right to insert or
require the Publisher to insert certain Printed Materials relating to the System
or Licensed Trademarks into each Unit.

         6.1.1 Manufacture of PlayStation 2 Format Discs.


                                       7
<PAGE>

                                                                    CONFIDENTIAL

            6.1.1.1 Designated Manufacturing Facilities. To insure compatibility
of the  PlayStation  2 Format Discs with the System,  consistent  quality of the
Licensed Product and incorporation of anti-piracy  security systems,  SCEA shall
designate  and  license  a  Designated   Manufacturing   Facility  to  reproduce
PlayStation 2 Format Discs. Publisher shall purchase [*] of its requirements for
PlayStation 2 Format Discs from such  Designated  Manufacturing  Facility during
the term of the  Agreement.  Any  Designated  Manufacturing  Facility shall be a
third party beneficiary of this Agreement.

            6.1.1.2  Creation of Master  CD-ROM or DVD-ROM.  Pursuant to Section
5.4 in connection  with final testing of Executable  Software,  Publisher  shall
provide SCEA with the number of Master Discs  specified in the  SourceBook  2. A
Designated  Manufacturing  Facility  shall create from one of the fully approved
Master Discs provided by Publisher the original  master CD-ROM or DVD-ROM,  from
which all other copies of the Licensed  Product are to be replicated.  Publisher
shall  be   responsible   for  the  costs,   as  determined  by  the  Designated
Manufacturing  Facility,  of producing such original master.  In order to insure
against  loss or damage to the copies of the  Executable  Software  furnished to
SCEA, Publisher will retain duplicates of all Master Discs, and neither SCEA nor
any Designated  Manufacturing  Facility shall be liable for loss of or damage to
any Master Discs or Executable Software.

         6.1.2 Manufacture of Printed Materials.

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

         6.1.3 Manufacture of Packaging.


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


            6.1.3.2  Manufacture  by  Alternate  Source.  If SCEA  elects to use
standard,  non-proprietary Packaging for the System, then Publisher may elect to
be responsible for  manufacturing  its own Packaging (other than any proprietary
labels and any  portion of a container  containing  Licensed  Trademarks,  which
Publisher  must purchase from a Designated  Manufacturing  Facility).  Publisher
shall  assume  all   responsibility  for  the  creation  of  such  Packaging  at
Publisher's  sole risk and expense.  Publisher shall be responsible for encoding
and printing  proprietary  edge labels  provided by a  Designated  Manufacturing
Facility  with  information  reasonably  specified by SCEA from time to time and
will  apply  such  labels to each Unit of the  Licensed  Product  as  reasonably
specified  by SCEA.  Prior  to  production  of each  order,  Publisher  shall be
required to supply SCEA with samples of any  Packaging  not produced or supplied
by a  Designated  Manufacturing  Facility,  at no charge  to SCEA or  Designated
Manufacturing Facility, for SCEA's approval with respect to the quality thereof.
SCEA shall have the right to disapprove  any Packaging that does not comply with
the Manufacturing  Specifications.  Manufacturing  Specifications  for Packaging
shall be comparable to manufacturing  specifications  applied by SCEA to its own
software  products  for the System.  If  Publisher  procures  Packaging  from an
alternate source,  then it 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 Products, then
the  Designated  Manufacturing  Facility  shall ship the component  parts of the
Licensed


-----------
* Confidential portions omitted and filed separately with the Commission.


                                       8
<PAGE>

                                                                    CONFIDENTIAL

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

      6.2 Price, Payment and Terms.

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

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

         6.2.3  Payment  Terms.  Purchase  Orders  will be  invoiced  as soon as
reasonably   practical  after  receipt,  and  such  invoice  will  include  both
manufacturing  price and royalties payable pursuant to Section 8.1 or 8.2 hereto
for each Unit of Licensed Products ordered.  Each invoice will be payable either
on a cash-in-advance basis or pursuant to a letter of credit, or, at SCEA's sole
discretion,  on credit  terms.  Terms for  cash-in-advance  and letter of credit
payments shall be as set forth in the SourceBook 2. All amounts  hereunder shall
be payable in United States dollars. All associated banking charges with respect
to  payments  of  manufacturing  costs and  royalties  shall be borne  solely by
Publisher.

         6.2.3.1  Credit Terms.  SCEA may at its sole  discretion  extend credit
terms and limits to Publisher. SCEA may also revoke such credit terms and limits
at its sole  discretion.  If Publisher  qualifies for credit terms,  then orders
will be invoiced  upon  shipment of Licensed  Products  and each invoice will be
payable  within  thirty (30) days of the date of the  invoice.  Any overdue sums
shall bear interest at the rate of one and one-half (1- 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  and/or
assembly  services  are  obtained  from  alternate  sources.  Each  shipment  to
Publisher  shall  constitute a separate sale,  whether said shipment be whole or
partial  fulfillment of any order.  Nothing in this Agreement shall excuse or be
construed as a waiver of  Publisher's  obligation to timely  provide any and all
payments owed to SCEA and Designated Manufacturing Facility.

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

      6.4  Ownership  of  Master  Discs.  Due to the  proprietary  nature of the
mastering process,  neither SCEA nor a Designated  Manufacturing  Facility shall
under any  circumstances  release any original  master  CD-ROM,  Master Discs or
other in-process materials to Publisher.  All such materials shall be and remain
the sole property of SCEA or Designated Manufacturing Facility.  Notwithstanding
the  foregoing,  Publisher  Intellectual  Property  Rights  contained in Product
Software that is contained in such in-process  materials is, as between SCEA and
Publisher,  the sole and exclusive property of Publisher or its licensors (other
than SCEA and/or its affiliates).

7.    Marketing and Distribution.

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

      7.2 Samples.  Publisher shall provide to SCEA, at no additional  cost, for
SCEA's internal use, [*] sample copies of each Licensed Product. Publisher shall
pay  any  manufacturing  costs  to  the  Designated  Manufacturing  Facility  in
accordance  with Section 6.2,  but shall not be obligated to pay  royalties,  in
connection  with such sample


-----------
* Confidential portions omitted and filed separately with the Commission.


                                       9
<PAGE>

                                                                    CONFIDENTIAL

Units.  In the event that  Publisher  assembles  any Licensed  Product  using an
alternate source,  Publisher shall be responsible for shipping such sample Units
to SCEA at Publisher's  cost and expense.  SCEA shall not directly or indirectly
resell any such sample copies of the Licensed Products without Publisher's prior
written consent. SCEA may give sample copies to its employees,  provided that it
uses its  reasonable  efforts to ensure  that such  copies are not sold into the
retail market.  In addition,  subject to  availability,  Publisher shall sell to
SCEA additional  quantities of Licensed Products at the Wholesale Price for such
Licensed  Product.  Any changes to SCEA's policy regarding sample Units shall be
set forth in the SourceBook 2.

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

      7.4  Demonstration  Disc  Programs.  SCEA may, from time to time,  provide
opportunities  for  Publisher  to  participate  in SCEA Demo Disc  programs.  In
addition,  SCEA may,  from time to time,  grant to Publisher the right to create
Third  Party Demo  Discs  pursuant  to SCEA  Established  Third  Party Demo Disc
Programs.   The   specifications   with  respect  to  the  approval,   creation,
manufacture,  marketing,  distribution  and sale of any such demo disc  programs
shall be set forth in the SourceBook 2 or in other  documentation to be provided
by SCEA to Publisher.  Except as otherwise specifically set forth herein, in the
SourceBook  2 or in  other  documentation,  Third  Party  Demo  Discs  shall  be
considered "Licensed Products" and shall be subject in all respects to the terms
and conditions of this Agreement  pertaining to Licensed Products.  In addition,
the  following  procedures  shall also apply to SCEA Demo Discs and Third  Party
Demo Discs:

         7.4.1 SCEA Demo Discs.

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

            7.4.1.2 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 Generic Line on the
SCEA Demo Disc title screen and packaging. Publisher's Product Information shall
comply with SCEA's technical specifications provided to Publisher. SCEA reserves
the  right to review  and test the  Product  Information  provided  and  request
revisions prior to inclusion on the SCEA Demo Disc. If SCEA requests  changes to
the Product  Information and Publisher elects to continue to participate in such
Demo Disc,  Publisher  shall make such changes as soon as possible after receipt
of written  notice of such  requested  changes from SCEA, but not later than the
deadline  for receipt of Product  Information.  Failure to make such changes and
provide the modified Product Information to SCEA by the deadline shall result in
the Product  Information being removed from the SCEA Demo Disc. Costs associated
with preparation of Product  Information  supplied to SCEA shall be borne solely
by Publisher.  Except as otherwise provided in this Section, SCEA shall not edit
or modify Product Information  provided to SCEA by Publisher without Publisher's
consent,  not to be  unreasonably  withheld.  SCEA  shall  have the right to use
subcontractors  to assist in the development of any SCEA Demo Disc. With respect
to Product Information provided by Publisher in demo form, the demo delivered to
SCEA shall not  constitute  the  complete  Licensed  Product  and shall be, at a
minimum,  an amount  sufficient  to  demonstrate  the  Licensed  Product's  core
features  and  value,  without  providing  too  much  information  so as to give
consumers a disincentive to purchase the complete Licensed Product.

            7.4.1.3 No Obligation to Publish.  Acceptance of Product Information
for test and review shall not be deemed confirmation that SCEA shall include the
Product  Information on an SCEA Demo Disc,  nor shall it constitute  approval of
any other  element of the Licensed  Product.  SCEA  reserves the right to choose
from products submitted from other Licensed  Publishers and first party products
to  determine  the products to be included in SCEA Demo Discs,  and  Publisher's
Licensed Products will not be guaranteed prominence or preferential treatment on
any


                                       10
<PAGE>

                                                                    CONFIDENTIAL

SCEA Demo Disc.  Nothing  herein shall be construed as creating an obligation of
SCEA to publish  Product  Information  submitted  by  Publisher in any SCEA Demo
Disc, nor shall SCEA be obligated to publish, advertise or promote any SCEA Demo
Disc.

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

         7.4.2 Third Party Demo Discs.

            7.4.2.1  License.  Publisher may participate in any SCEA Established
Third Party Demo Disc Program.  Publisher  shall notify SCEA of its intention to
participate  in any such  program,  and upon receipt of such notice,  SCEA shall
grant to Publisher the right and license to use Licensed Products in Third Party
Demo Discs and to use, distribute, market, advertise and otherwise promote (and,
if permitted in accordance  with the terms of any SCEA  Established  Third Party
Program or otherwise  permitted by SCEA, to sell) such Third Party Demo Discs in
accordance with the SourceBook 2, which may be modified from time to time at the
sole discretion of SCEA.  Unless  separately  agreed in writing with SCEA, Third
Party Demo Discs shall not be used,  distributed,  promoted,  bundled or sold in
conjunction with other products. In addition, SCEA hereby consents to the use of
the Licensed  Trademarks in connection  with Third Party Demo Discs,  subject to
the approval  procedures set forth in this  Agreement.  If any SCEA  Established
Third Party Demo Disc  Program is specified  by SCEA to be for  promotional  use
only  and not for  resale,  and  such  Third  Party  Demo  Disc is  subsequently
discovered to be for sale,  Publisher's  right to produce Third Party Demo Discs
shall  thereupon  be  automatically  revoked,  and SCEA  shall have the right to
terminate  any related  Third Party Demo Discs in  accordance  with the terms of
Section 14.3 or 14.4 hereto.

            7.4.2.2 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 SourceBook 2
or  otherwise.  In  addition,  SCEA shall  evaluate the Third Party Demo Disc in
accordance  with the approval  provisions  for  Executable  Software and Printed
Materials  set  forth  in  Sections  5.4  and  5.5,  respectively.  Furthermore,
Publisher  shall obtain the approval of SCEA in connection  with any Advertising
Materials relating to the Third Party Demo Discs in accordance with the approval
provisions  set forth in Section  5.6.  Costs  associated  with Third Party Demo
Discs shall be borne solely by Publisher.  No approval by SCEA of any element of
any Third  Party  Demo Disc  shall be deemed an  approval  of any other  element
thereto,  nor does any such approval  constitute  final approval for the related
Licensed Product.  Unless otherwise  permitted by SCEA,  Publisher shall clearly
and  conspicuously  state on all Third  Party Demo Disc  Packaging  and  Printed
Materials  that the Third Party Demo Disc is for  promotional  purposes only and
not for resale.

            7.4.2.3 Manufacture and Royalty of Third Party Demo Discs. Publisher
shall  comply  with  all  Manufacturing   Specifications  with  respect  to  the
manufacture and payment for  manufacturing  costs of Third Party Demo Discs, and
Publisher  shall also comply with all terms and  conditions of Section 6 hereto.
No  costs  incurred  in the  development,  manufacture,  licensing,  production,
marketing  and/or  distribution  (and if permitted  by SCEA,  sale) of the Third
Party Demo Disc shall be deducted  from any amounts  payable to SCEA  hereunder.
Royalties on Third Party Demo Discs shall be as provided in Section 8.2.

      7.5 Contests and Sweepstakes of Publisher.  SCEA  acknowledges  that, from
time to time, Publisher may conduct contests and sweepstakes to promote Licensed
Products.  SCEA  shall  permit  Publisher  to  include  contest  or  sweepstakes
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


                                       11
<PAGE>

                                                                    CONFIDENTIAL

sweepstakes,  or  the  prizes  being  awarded  to  winners  of  the  contest  or
sweepstakes; and

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

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

      7.6  PlayStation  Website.  All Licensed  Publishers  shall be required to
provide Product Information for a web page for each of its Licensed Products for
display on the PlayStation  promotional website, or other website or websites as
may be operated by SCEA from time to time in  connection  with the  promotion of
the PlayStation brand. Specifications for Product Information for such web pages
shall be as provided in the SourceBook 2. Publisher shall provide SCEA with such
Product  Information  for each  Licensed  Product  upon  submission  of  Printed
Materials  to SCEA  for  approval  in  accordance  with  Section  5.5.2  hereto.
Publisher  shall also  provide  updates  to such web page in a timely  manner as
required by SCEA in updates to the SourceBook 2.

      7.7 Distribution.

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

         7.7.2 Limitations on Distribution. Notwithstanding any other provisions
in this Agreement,  Publisher shall not, directly or indirectly,  solicit orders
from or sell any Units of the Licensed  Products to any person or entity outside
of the  Licensed  Territory.  In  addition,  Publisher  shall  not  directly  or
indirectly  solicit orders for or sell any Units of the Licensed Products in any
situation  where  Publisher  knows or reasonably  should know that such Licensed
Products may be exported or resold outside of the Licensed Territory.

8.    Royalties.

      8.1 Applicable Royalties on Licensed Products.

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

------------------------------------------------------
               Wholesale Price   Per Title Royalty
------------------------------------------------------
[Band 1]            $[*] to $[*]      $[*]
[Band 2]            $[*] to $[*]      $[*]
[Band 3]            $[*] to $[*]      $[*]
[Band 4]            $[*] to $[*]      $[*]
[Band 5]            $[*] +            [*] % of WSP + $[*]
------------------------------------------------------
In the absence of  satisfactory  evidence to support the WSP,  the royalty  rate
that shall apply will be [*] per Unit.

        8.1.2 Reorders  and Other  Programs.  Royalties on additional  orders to
manufacture a specific  Licensed Product shall be the royalty  determined by the
initial  Wholesale  Price as reported by  Publisher  for that  Licensed  Product
regardless  of the  wholesale  price  of the  Licensed  Product  at the  time of
reorder,  except  in the  event  that the  Wholesale  Price  increases  for such
Licensed Product, in which case the royalty shall be adjusted upwards to reflect
the higher Wholesale Price.  Licensed  Products  qualifying for SCEA's "Greatest
Hits"  programs  or other  programs  offered  by SCEA  shall be  subject  to the
royalties  applicable for such programs.  Publisher  acknowledges that as of the
date of execution of this  Agreement no "Greatest  Hits" program  exists for the
PlayStation 2 Third Party licensing program.

      8.2 Third Party Demo Disc Program  Royalties:  Publisher  shall pay SCEA a
per Unit royalty in United States  dollars of [*] 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. Payment of royalties under Sections 8.1 and 8.2 shall be made
to SCEA  through  its  Designated  Manufacturing  Facility  concurrent  with the
placement  of  an  order  to  manufacture   Licensed   Product  and  payment  of
manufacturing  costs in accordance  with the terms and  conditions  set forth in
Sections  6.2.3,  unless  otherwise  agreed in writing with SCEA. At the time of
placing an order to manufacture a Licensed  Product,  Publisher  shall submit to
SCEA an  accurate  accounting  statement  setting  out the  number  of  units of
Licensed  Product  to  be  manufactured,   projected  initial  wholesale  price,
applicable  royalty,  and total amount due SCEA.  In addition,  Publisher  shall
submit to SCEA prior to placing the initial  order for each  Licensed  Product a
separate certification,


-------------------
*    Confidential portion omitted and filed separately with the Commission.


                                       12
<PAGE>

                                                                    CONFIDENTIAL

in the  form  provided  by SCEA in the  SourceBook  2,  signed  by  officers  of
Publisher that  certifies that the Wholesale  Price provided to SCEA is accurate
and  attaching  such  documentation  supporting  the WSP as  requested  by SCEA.
Payment  shall be made  prior to  manufacture  unless  SCEA has agreed to extend
credit terms to Publisher in writing pursuant to Section 6.2.3.3. Nothing herein
shall be construed as requiring  SCEA to extend credit terms to  Publisher.  The
accounting  statement due hereunder shall be subject to the audit and accounting
provisions  set  forth  in  paragraph  16.2  below.  No  costs  incurred  in the
development,  manufacture,  marketing,  sale and/or distribution of the Licensed
Products  shall  be  deducted  from any  royalties  payable  to SCEA  hereunder.
Similarly, there shall be no deduction from the royalties otherwise owed to SCEA
hereunder as a result of any  uncollectible  accounts owed to Publisher,  or for
any credits,  discounts,  allowances  or returns  which  Publisher may credit or
otherwise  grant to any  third  party  customer  of any  Units  of the  Licensed
Products, or for any taxes, fees,  assessments or expenses of any kind which may
be incurred by  Publisher in  connection  with its sale or  distribution  of any
Units of the  Licensed  Products  or  arising  with  respect  to the  payment of
royalties  hereunder.  In  addition  to the  royalty  payments  provided to SCEA
hereunder,  Publisher shall be solely responsible for and bear any cost relating
to any withholding  taxes or other such assessments  which may be imposed by any
governmental  authority  with respect to the royalties  paid to SCEA  hereunder;
provided,  however, that SCEA shall not manufacture Licensed Products outside of
the United  States  without  the 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 Rebate Programs.  Publisher shall be eligible to participate in one of
three rebate programs offered by SCEA: the Standard Rebate program,  the Level 1
Rebate program,  or the Level 2 Rebate program.  If Publisher qualifies for such
rebates as set forth herein, rebates shall be credited to Publisher's account as
provided below:

---------------------------------------------------------
Units Ordered      Standard     Level 1       Level 2
---------------------------------------------------------
[*] - [*]          [*]          [*]           [*]
[*] - [*]          [*]          [*]           [*]
[*] - [*]          [*]          [*]           [*]
[*] - [*]          [*]          [*]           [*]
[*] - [*]          [*]          [*]           [*]
[*] - [*]          [*]          [*]           [*]
[*] - [*]          [*]          [*]           [*]
---------------------------------------------------------


         8.4.1 Standard Rebate Program.  All Publishers qualify for the Standard
Rebate program.  Rebates will be offered on an individual  title basis.  Rebates
will be given to any individual  Licensed Product that exceeds the above numbers
of Units during the first year after first commercial  shipment of such Licensed
Product.  The rebate in effect at the end of such year for the Licensed  Product
will remain in effect for as long as Publisher  continues to sell such  Licensed
Product,  but  Publisher  will  not  receive  further  rebates  if sales of such
Licensed  Product hit additional  thresholds as specified above after such year.
The Standard Rebate may not be used in conjunction  with a Third Party Demo Disc
program or any promotional  program of SCEA, with Licensed Products that qualify
for any "Greatest  Hits" program of SCEA or with Licensed  Products that qualify
for the [*]. Royalty.


         8.4.2 Level 1 Rebate  Program:  To be  eligible  for the Level 1 Rebate
program,  Publisher must ship over [*] Units of certain  Licensed  Products in a
single  Fiscal  Year.  Level 1 Rebates  shall be  credited  to  Publisher  on an
individual title basis. Other terms of the Level 1 Rebate are as follows:


      (i) Only Publisher's  titles (as determined below) that meet the following
conditions  shall count toward the [*] Unit  threshold:  Publisher must order at
least [*] Units of the Licensed Product both within the first year of commercial
release of such Licensed Product and during the qualifying Fiscal Year.


      (ii) Any Licensed Products,  including "Greatest Hits" titles and products
for the original  PlayStation game console,  but excluding all demo discs, shall
count toward the [*] Unit threshold (provided they meet the conditions set forth
in  Section  8.4.2(i)  above).  For  purposes  of  determining  Level  1  Rebate
thresholds  and the  conditions  set  forth in  Section  8.4.2(i),  full  priced
Licensed  Products and "Greatest  Hits"  Licensed  Products  shall be considered
separate Licensed Products, with separate Unit minimums and release dates.


      (iii) Level 1 Rebates shall apply only to Licensed Products (not including
"Greatest  Hits" titles,  Licensed  Products  qualifying for the [*] royalty and
products for the original  PlayStation  game console) ordered in the Fiscal Year
following  the  Fiscal  Year in which the [*] Unit  threshold  is met.  Units of
Licensed  Products that qualified  Publisher for inclusion in the Level 1 Rebate
program in the previous Fiscal Year shall not be entitled to receive the Level 1
Rebate.


      (iv) Publisher must  re-qualify for the Level 1 Rebate Program each Fiscal
Year. If a Publisher  fails to requalify for any Fiscal Year,  then the Standard
Rebate  shall  apply in such  Fiscal  Year.  The first  Fiscal  Year for which a
Publisher  may  qualify  for the Level 1 Rebate  shall be the Fiscal Year ending
March 31, 2000, and if the Publisher  qualifies for the Level 1 Rebate,  it will
apply to Licensed


-------------------
*    Confidential portions omitted and filed separately with the Commission.


                                       13
<PAGE>

                                                                    CONFIDENTIAL

Products ordered in the Fiscal Year commencing April 1, 2000.

      (v) Licensed Products eligible for the Level 1 Rebate program shall not be
eligible for Standard  Rebates,  and Level 1 Rebates  shall  supersede  Standard
Rebates with respect to any individual  Licensed Product.  If a Licensed Product
qualifies for the Standard  Rebate in one Fiscal Year,  and Publisher  qualifies
for the Level 1 Rebate in the next Fiscal Year,  Units of such Licensed  Product
ordered in the next Fiscal Year will  receive the Level 1 Rebate  commencing  on
April 1 of the next Fiscal Year going forward,  but such Level 1 Rebate will not
be  credited  retroactively  to Units of the  Licensed  Product  ordered  in the
previous  Fiscal Year. For example,  Publisher  orders [*] Units of Product X in
Fiscal Year 2001,  receiving a Standard Rebate of [*].  Publisher  qualifies for
the Level 1 Rebate in Fiscal  Year  2002.  Publisher  will  receive  the Level 1
Rebate of [*]  commencing  with Units  ordered  on April 1,  2001,  but will not
receive a  retroactive  credit for Units  ordered  prior to April 1, 2001.  When
Publisher reaches the [*] Unit threshold,  it will receive a retroactive  credit
of [*] on all Level 1 Rebate Units ordered,  as well as a retroactive  credit of
[*] on Standard  Rebate Units ordered in the previous Fiscal Year, and Publisher
will receive the Level 1 Rebate of [*] going forward.

         8.4.3 Level 2 Rebate  Program:  To be  eligible  for the Level 2 Rebate
program,  Publisher must ship over [*] Units of certain Licensed Products in any
Fiscal Year.  Level 2 Rebates  shall be credited to  Publisher on an  individual
title basis. Other terms of the Level 2 Rebate are as follows:

      (i) Only Publisher's  titles (as determined below) that meet the following
conditions  shall count toward the [*] Unit  threshold:  Publisher must order at
least [*] Units of the Licensed Product both within the first year of commercial
release of such Licensed Product and during the qualifying Fiscal Year.

      (ii) Any Licensed Products,  including "Greatest Hits" titles and products
for the original  PlayStation game console,  but excluding all demo discs, shall
count toward the [*] Unit threshold (provided they meet the conditions set forth
in  Section  8.4.3(i)  above).  For  purposes  of  determining  Level  2  Rebate
thresholds  and the  conditions  set  forth in  Section  8.4.2(i),  full  priced
Licensed  Products and "Greatest  Hits"  Licensed  Products  shall be considered
separate Licensed Products, with separate Unit minimums and release dates.


      (iii) Level 2 Rebates shall apply only to Licensed Products (not including
"Greatest  Hits" titles,  Licensed  Products  qualifying for the [*] royalty and
products for the original  PlayStation  game console) ordered in the Fiscal Year
following  the  Fiscal  Year in which the [*] Unit  threshold  is met.  Units of
Licensed  Products that qualified  Publisher for inclusion in the Level 2 Rebate
program in the previous Fiscal Year shall not be entitled to receive the Level 2
Rebate.


      (iv) Publisher must  re-qualify for the Level 2 Rebate Program each Fiscal
Year.  If  Publisher  fails to  requalify  for any Fiscal Year then the Standard
Rebate or Level 1 Rebate,  as the case may be,  shall apply in such Fiscal Year.
The first  Fiscal Year for which a Publisher  may qualify for the Level 2 Rebate
shall be the Fiscal Year ending March 31, 2000,  and if the Publisher  qualifies
for the Level 2 Rebate, it will apply to Licensed Products ordered in the Fiscal
Year commencing April 1, 2000.

      (v) Licensed Products eligible for the Level 2 Rebate program shall not be
eligible  for  Standard  Rebates or Level 1 Rebates,  and Level 2 Rebates  shall
supersede  Standard  Rebates and Level 1 Rebates with respect to any  individual
Licensed  Product.  If a Licensed  Product  qualifies for the Standard Rebate or
Level 1 Rebate in one  Fiscal  Year,  and  Publisher  qualifies  for the Level 2
Rebate in the next Fiscal Year,  Units of such Licensed  Product  ordered in the
next Fiscal Year will receive the Level 2 Rebate going forward, but such Level 2
Rebate  will not be  credited  retroactively  to Units of the  Licensed  Product
ordered in the previous Fiscal Year. See Section 8.4.2(v) for an example.

      8.5  Calculation  and Use of Rebates.  Rebate  percentages  for all rebate
programs shall be credited  against  royalties owed SCEA and shall have no other
monetary value. All rebates,  whether under the Standard Rebate,  Level 1 Rebate
or Level 2 Rebate  Programs shall be issued by SCEA as a credit to Publisher for
use against future royalty payments. It is Publisher's  responsibility to inform
SCEA when it reaches any rebate  threshold.  In no event shall  Publisher take a
deduction off royalties owed SCEA or deduction off an invoice payable to SCEA on
current production unless and until SCEA issues a credit to Publisher in writing
or  unless  otherwise  agreed  in  writing.  From  time to time  SCEA may  allow
Publisher  to use  credits  in other  manners  on  terms  and  conditions  to be
determined  by SCEA.  Publisher  may use rebate  credits to procure  Development
Tools. Units of Licensed Products shall be considered "ordered" when Units first
begin to ship from a Designated Manufacturing Facility.

      8.6 Rebate Credits.  Subject to Sections 8.4.2(v) and 8.4.3(v), all rebate
programs  are  [*],  such  that  Publisher  receives  a credit  for each  rebate
percentage  against  [*] Units when it reaches the Unit  threshold  for the next
rebate  percentage.  SCEA shall credit  Publisher's  account with respect to [*]
rebates as follows:  (A) if Publisher's  initial order for a Licensed Product is
less than any  rebate  threshold  provided  above,  then SCEA  shall [*]  credit
Publisher's  account sixty (60) days following the date that Publisher  notifies
SCEA that orders of a Licensed Product exceed any rebate  threshold,  subject to
SCEA's right to confirm such information;  and (B) if Publisher's  initial order
for a Licensed Product reaches or exceeds any rebate  threshold  provided above,
then  Publisher  may credit the rebate amount set forth above as a separate line
item on


-------------------
*    Confidential portion omitted and filed separately with the Commission.

                                       14
<PAGE>

                                                                    CONFIDENTIAL

the Purchase  Order with  respect to such  Licensed  Product,  subject to SCEA's
confirmation right.

9.    Representations and Warranties.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10.   Indemnities; Limited Liability.


                                       15
<PAGE>

                                                                    CONFIDENTIAL

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

10.3  LIMITATION OF LIABILITY.

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

         10.3.2 LIMITATION OF PUBLISHER'S LIABILITY. IN NO EVENT SHALL PUBLISHER
OR ITS AFFILIATED COMPANIES AND THEIR SUPPLIERS,  OFFICERS, DIRECTORS, EMPLOYEES
OR AGENTS BE LIABLE TO SCEA FOR ANY LOSS OF PROFITS,  OR ANY SPECIAL,  PUNITIVE,
INCIDENTAL,  INDIRECT OR CONSEQUENTIAL  DAMAGES ARISING OUT OF, RELATED TO OR IN
CONNECTION WITH (i) THIS AGREEMENT OR (ii) THE USE OR DISTRIBUTION IN ACCORDANCE
WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT OF ANY CODE PROVIDED BY SCEA, IN
WHOLE OR IN PART, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),
INDEMNITY, PRODUCT LIABILITY OR OTHERWISE,  PROVIDED THAT SUCH


                                       16
<PAGE>

                                                                    CONFIDENTIAL

LIMITATIONS  SHALL NOT APPLY TO DAMAGES  RESULTING  FROM  PUBLISHER'S  BREACH OF
SECTIONS 4, 10.2,  11 OR 13 OF THIS  AGREEMENT,  AND PROVIDED  FURTHER THAT SUCH
LIMITATIONS SHALL NOT APPLY TO AMOUNTS WHICH PUBLISHER MAY BE REQUIRED TO PAY TO
THIRD PARTIES UNDER SECTIONS 10.2 OR 16.10.

      10.4  DISCLAIMER  OF  WARRANTY.  EXCEPT AS OTHERWISE  EXPRESSLY  SET FORTH
HEREIN,  NEITHER SCEA NOR ITS AFFILIATES AND SUPPLIERS  MAKE, NOR DOES PUBLISHER
RECEIVE,  ANY  REPRESENTATIONS  OR  WARRANTIES,  EXPRESS,  IMPLIED OR STATUTORY,
REGARDING THE SONY MATERIALS,  SCEA'S  CONFIDENTIAL  INFORMATION THE SYSTEM, THE
UNITS OF THE LICENSED PRODUCTS MANUFACTURED HEREUNDER AND/OR PUBLISHER'S PRODUCT
INFORMATION  INCLUDED  ON SCEA DEMO  DISCS.  SCEA  SHALL  NOT BE LIABLE  FOR ANY
INJURY, LOSS OR DAMAGE,  DIRECT,  INDIRECT OR CONSEQUENTIAL,  ARISING OUT OF THE
USE OR INABILITY TO USE ANY UNITS AND/OR ANY SOFTWARE  ERRORS  AND/OR  "BUGS" IN
PUBLISHER'S  PRODUCT  INFORMATION  WHICH MAY BE  REPRODUCED  ON SCEA DEMO DISCS.
WITHOUT  LIMITING THE GENERALITY OF THE  FOREGOING,  SCEA AND ITS AFFILIATES AND
SUPPLIERS  EXPRESSLY  DISCLAIM THE IMPLIED  WARRANTIES  OF  MERCHANTABILITY  AND
FITNESS FOR A  PARTICULAR  PURPOSE AND THEIR  EQUIVALENTS  UNDER THE LAWS OF ANY
JURISDICTION,  REGARDING THE SONY MATERIALS,  SCEA'S  CONFIDENTIAL  INFORMATION,
LICENSED  PRODUCTS,  SCEA  DEMO  DISCS  AND THE  SYSTEM.  ANY  WARRANTY  AGAINST
INFRINGEMENT THAT MAY BE PROVIDED IN SECTION 2-312(3) OF THE UNIFORM  COMMERCIAL
CODE AND/OR IN ANY OTHER COMPARABLE STATUTE IS EXPRESSLY DISCLAIMED.

11.   SCEA Intellectual Property Rights.

      11.1  Licensed  Trademarks.  The  Licensed  Trademarks  and  the  goodwill
associated  therewith  are  and  shall  be the  exclusive  property  of  SCEA or
Affiliates of SCEA.  Nothing  herein shall give  Publisher  any right,  title or
interest in or to any of the  Licensed  Trademarks  or any other  trademarks  of
SCEA, other than the non-exclusive license provided herein.  Publisher shall not
do or  cause to be done any 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 Sony Materials and System.  All rights with respect to the
Sony  Materials  and  System,  including,   without  limitation,   all  of  SCEA
Intellectual Property Rights therein, are and shall be the exclusive property of
SCEA or Affiliates of SCEA. Nothing herein shall give Publisher any right, title
or interest in or to the Sony Materials or the System (or any portion  thereof),
other than the non-exclusive license provided herein.  Publisher shall not do or
cause to be done any act or thing in any way  impairing or tending to impair any
of SCEA's  rights,  title or interests in or to the Sony Materials or the System
(or any portion thereof).

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

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

13.   Confidentiality.

      13.1 SCEA's Confidential Information.

         13.1.1   Definition  of  SCEA's   Confidential   Information.   "SCEA's
Confidential Information" shall mean:

      (i) the System, Sony Materials and Development Tools;

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


                                       17
<PAGE>

                                                                    CONFIDENTIAL

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

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

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

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

     (i) not disclose SCEA's  Confidential  Information to any person or entity,
other than those  employees or directors of the Publisher whose duties justify a
"need-to-know"  and who have executed a confidentiality  agreement in which such
employees or directors have agreed not to disclose and to hold  confidential all
confidential  information  and materials  (inclusive of those of third  parties)
which may be  disclosed  to them or to which  they may have  access  during  the
course of their duties.  At SCEA's request,  Publisher shall provide SCEA with a
copy of such  confidentiality  agreement  between Publisher and its employees or
directors,  and shall also  provide  SCEA with a list of employee  and  director
signatories. Publisher shall not disclose any of SCEA's Confidential Information
to third parties,  including  without  limitation to consultants or agents.  Any
employees  or directors  who obtain  access to SCEA's  Confidential  Information
shall be advised by Publisher of the confidential  nature of SCEA's Confidential
Information, and Publisher shall be responsible for any breach of this Agreement
by its employees or directors.

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

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

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

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

            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  hereunder  shall not result in any  obligation on the
part of SCEA to approve any materials of Publisher  hereunder or otherwise,  nor
shall  such  disclosure  by SCEA  give  Publisher  any  right  to,  directly  or
indirectly,  develop, manufacture or sell any product derived from or which uses
any of SCEA's  Confidential  Information,  other than as expressly  set forth in
this Agreement.


                                       18
<PAGE>

                                                                    CONFIDENTIAL

            13.1.6 Publisher's Obligations Upon Unauthorized  Disclosure.  If at
any time Publisher becomes aware of any unauthorized  duplication,  access, use,
possession or knowledge of any SCEA's Confidential Information,  it shall notify
SCEA as soon as reasonably  practicable,  and shall  promptly act to recover any
such information and prevent further breach of the  confidentiality  obligations
herein.  Publisher  shall provide any and all  reasonable  assistance to SCEA to
protect SCEA's proprietary rights in any of SCEA's Confidential Information that
it or its employees or permitted  subcontractors may have directly or indirectly
disclosed  or made  available,  and  that  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  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


                                       19
<PAGE>

                                                                    CONFIDENTIAL

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  it or  its  employees  or
permitted  subcontractors  may have  directly or  indirectly  disclosed  or made
available and that may be duplicated,  accessed,  used,  possessed or known in a
manner or for a purpose not expressly authorized by this Agreement including but
not limited to  enforcement  of  confidentiality  agreements,  commencement  and
prosecution in good faith (alone or with the disclosing  party) of legal action,
and  reimbursement  for all  reasonable  attorneys'  fees,  costs  and  expenses
incurred  by  Publisher  to  protect  its  proprietary   rights  in  Publisher's
Confidential  Information.  SCEA shall take all  reasonable  steps  requested by
Publisher to prevent the  recurrence of any  unauthorized  duplication,  access,
use, possession or knowledge of Publisher's Confidential Information.

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

     (i) to legal counsel;

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

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

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

14.  Term and Termination.

     14.1  Effective  Date;  Term.  This  Agreement  shall not be binding on the
parties  until it has been  signed  by each  party,  in which  event it shall be
effective  from  the  Effective  Date  until  March  31,  2003,  unless  earlier
terminated  pursuant to Section 14.2. The term shall be  automatically  extended
for additional one-year terms thereafter, unless either party provides the other
with written  notice of its election not to so extend on or before January 31 of
the applicable year.  Notwithstanding  the foregoing the term for the protection
of SCEA's  Confidential  Information  and Publisher's  Confidential  Information
shall be as set forth in Sections 13.1.2 and 13.2.2 respectively.

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

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

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

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

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

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

     14.3  Product-by-Product  Termination by SCEA. In addition to the events of
termination  described in Section 14.2,  above,  SCEA,  at its option,  shall be
entitled to terminate,  on a product-by-product  basis, the licenses and related
rights  herein  granted to  Publisher in the event that (a)  Publisher  fails to
notify  SCEA  promptly  in  writing  of any  material  change  to any  materials
previously


                                       20
<PAGE>

                                                                    CONFIDENTIAL

approved by SCEA in  accordance  with Section 5 or Section 6.1 hereto,  and such
breach is not  corrected  or cured  within  thirty  (30) days  after  receipt of
written  notice of such breach;  (b) Publisher  uses a third party that fails to
comply with the  requirements of Section 3 in connection with the development of
any Licensed Product; (c) any third party with whom Publisher has contracted for
the development of Executable Software breaches any of its material  obligations
to SCEA pursuant to such third party's  agreement with SCEA with respect to such
Licensed  Product;  or (d)  Publisher  cancels a  Licensed  Product  or fails to
provide SCEA in  accordance  with the  provisions  of Section 5 above,  with the
final version of the Executable  Software for any Licensed  Product within three
(3) months of the  scheduled  release  date  according  to the Product  Proposal
(unless a modified  final  delivery date has been agreed to by the parties),  or
fails to provide work in progress to SCEA in strict  accordance  with the Review
Process in Section 5.3.

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

            14.4.1  Suspension  of Agreement.  SCEA may suspend this  Agreement,
entirely or with respect to a particular Licensed Product or program,  for a set
period of time  which  shall be  specified  in  writing  to  Publisher  upon the
occurrence of any breach of this Agreement.

            14.4.2  Liquidated  Damages.  Whereas  a minor  breach of any of the
events set out below may not warrant  termination  of this  Agreement,  but will
cause SCEA damages in amounts difficult to quantify,  SCEA may require Publisher
to pay liquidated damages of [*] per event as follows:

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

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

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

     (iv) Failure to comply with the SourceBook 2, Manufacturing  Specifications
or Guidelines which relates in any way to use of Licensed Trademarks.

Liquidated  damages shall be invoiced  separately or on Publisher's next invoice
for Licensed  Products.  SCEA reserves the right to terminate this Agreement for
breach in lieu of seeking  liquidated  damages  or in the event that  liquidated
damages are unpaid.

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

15.  Effect of Expiration or Termination.

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

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


-------------------
*    Confidential portion omitted and filed separately with the Commission.


                                       21
<PAGE>

                                                                    CONFIDENTIAL

     15.3  Disposal  of  Unsold  Units.  Provided  that  this  Agreement  is not
terminated  due to a  breach  or  default  of  Publisher,  Publisher  may,  upon
expiration or termination of this  Agreement,  sell off existing  inventories of
Licensed  Products,  on a non-exclusive  basis, for a period of ninety (90) days
from the date of expiration or termination of this Agreement,  and provided such
inventories  have not been  manufactured  solely or principally  for sale during
such period.  Subsequent to the expiration of such ninety (90) day period, or in
the event this  Agreement is  terminated as a result of any breach or default of
Publisher,  any and all Units of the Licensed Products  remaining in Publisher's
inventory shall be destroyed by Publisher  within five (5) business days of such
expiration or termination. Within five (5) business days after such destruction,
Publisher  shall  provide  SCEA  with an  itemized  statement,  certified  to be
accurate  by an  officer  of  Publisher,  indicating  the number of Units of the
Licensed  Products which have been destroyed (on a  title-by-title  basis),  the
location and date of such destruction and the disposition of the remains of such
destroyed materials.

     15.4  Return  of Sony  Materials  and  Confidential  Information.  Upon the
expiration or earlier termination of this Agreement, Publisher shall immediately
deliver to SCEA,  or if and to the extent  requested by SCEA  destroy,  all Sony
Materials and any and all copies thereof, and Publisher and SCEA shall, upon the
request of the other party, immediately deliver to the other party, or if and to
the extent requested by such party destroy, all Confidential  Information of the
other  party,  including  any and all  copies  thereof,  which the  other  party
previously  furnished to it in  furtherance of this  Agreement.  Within five (5)
working days after any such destruction,  Publisher and/or SCEA, as appropriate,
shall provide the other party with an affidavit of  destruction  and an itemized
statement, each certified to be accurate by an officer of Publisher,  indicating
the number of copies  and/or  units of the Sony  Materials  and/or  Confidential
Information which have been destroyed, the location and date of such destruction
and the  disposition  of the remains of such destroyed  materials.  In the event
that Publisher  fails to return the Sony Materials or  Confidential  Information
and SCEA must resort to legal means  (including  without  limitation  any use of
attorneys)  to recover the Sony  Materials or  Confidential  Information  or the
value thereof, all costs,  including SCEA's reasonable attorney's fees, shall be
borne by Publisher, and SCEA may, in addition to SCEA's other remedies, withhold
such amounts  from any payment  otherwise  due from SCEA to Publisher  under any
agreement between SCEA and Publisher.

     15.5 Extension of this Agreement; Termination Without Prejudice. SCEA shall
be under no  obligation  to extend this  Agreement  notwithstanding  any actions
taken by either of the parties prior to the expiration of this  Agreement.  Upon
the expiration of this Agreement, neither party shall be liable to the other for
any  damages  (whether  direct,  indirect,   consequential  or  incidental,  and
including, without limitation, any expenditures,  loss of profits or prospective
profits)  sustained  or arising out of or alleged to have been  sustained  or to
have  arisen out of such  expiration.  The  expiration  or  termination  of this
Agreement  shall be without  prejudice to any rights or remedies which one party
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 Product is not accurate,  SCEA shall be entitled to
request additional  documentation from Publisher to support the listed Wholesale
Price for such Licensed Product.  In addition,  during the Term and for a period
of two (2) years thereafter and upon the giving of reasonable  written notice to
Publisher,  representatives  of SCEA shall have access to, and the right to make
copies and summaries of, such portions of all of  Publisher's  books and records
as pertain to the Licensed  Products  and any  payments due or credits  received
hereunder.  In the event that such inspection  reveals an under-reporting of any
payment due to SCEA,  Publisher shall  immediately pay SCEA such amount.  In the
event that any audit conducted by SCEA reveals that Publisher has under-reported
any payment due to SCEA hereunder by [*] 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


-------------------
*    Confidential portion omitted and filed separately with the Commission.


                                       22
<PAGE>

                                                                    CONFIDENTIAL

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.

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

     16.6   Subcontractors.   Publisher  shall  not  sell,   assign,   delegate,
subcontract,  sublicense or otherwise transfer or encumber all or any portion of
the  licenses  herein  granted  without  the  prior  written  approval  of SCEA,
provided,  however,  that Publisher may retain those  subcontractors who provide
services which do not require  access to Sony  Materials or SCEA's  Confidential
Information   without   such  prior   approval.   Publisher   may  retain  those
subcontractor(s)  to assist with the  development,  publication and marketing of
Licensed Products (or portions thereof) which have signed (i) an LPA or LDA with
SCEA (the  "PlayStation  2 Agreement")  in full force and effect  throughout the
term of such development and marketing;  or (ii) an SCEA-approved  subcontractor
agreement ("Subcontractor  Agreement"); and SCEA has approved such subcontractor
in  writing,   which  approval  shall  be  in  SCEA's  sole   discretion.   Such
Subcontractor  Agreement shall provide that SCEA is a third-party beneficiary of
such Subcontractor Agreement and has the full right to bring any actions against
such  subcontractors  to comply in all respects with the terms and conditions of
this  Agreement.  Publisher  shall  provide  a copy  of any  such  Subcontractor
Agreement to SCEA prior to and following execution thereof.  Publisher shall not
disclose to any subcontractor any of SCEA's Confidential Information, including,
without limitation, any Sony Materials,  unless and until either a PlayStation 2
Agreement or a  Subcontractor  Agreement has been executed and approved by SCEA.
Notwithstanding any consent which may be granted by SCEA for Publisher to employ
any such permitted subcontractor(s),  or any such separate agreement(s) that may
be entered into by Publisher  with any such permitted  subcontractor,  Publisher
shall remain fully liable for its compliance  with all of the provisions of this
Agreement and for the  compliance of any and all permitted  subcontractors  with
the  provisions  of any  agreements  entered  into  by  such  subcontractors  in
accordance with this Section.  Publisher shall use its best efforts to cause its
subcontractors  retained  in  furtherance  of this  Agreement  to  comply in all
respects  with  the  terms  and  conditions  of  this   Agreement,   and  hereby
unconditionally  guarantees  all  obligations  of its  subcontractors.  SCEA may
subcontract any of its rights or obligations hereunder.

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


                                       23
<PAGE>

                                                                    CONFIDENTIAL

any  service of process may be effected by delivery of the summons in the manner
provided  in the  delivery  of  notices  set forth in  Section  16.1  above.  In
addition,  each party  hereby  waives the right to a jury trial in any action or
proceeding related to this Agreement.

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


     16.10 Remedies.  Unless expressly set forth to the contrary, either party's
election of any remedies  provided for in this Agreement  shall not be exclusive
of any other  remedies,  and all such remedies shall be deemed to be cumulative.
Any breach of  Sections 3, 4, 5, 6.1,  11 and 13 of this  Agreement  would cause
significant and irreparable harm to SCEA, the extent of which would be difficult
to ascertain.  Accordingly,  in addition to any other remedies including without
limitation  equitable  relief to which SCEA may be  entitled,  in the event of a
breach by Publisher or any of its employees or permitted  subcontractors  of any
such  Sections  of this  Agreement,  SCEA  shall be  entitled  to the  immediate
issuance  without bond of ex parte  injunctive  relief or, if a bond is required
under  applicable  law, on the posting of a bond in an amount not to exceed [*],
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 SourceBook 2 from time to time upon reasonable notice to Publisher.

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

     16.16  Integration.   This  Agreement,  together  with  the  SourceBook  2,
constitutes the entire  agreement  between SCEA and Publisher and supersedes all
prior   or   contemporaneous   agreements,    proposals,    understandings   and
communications between SCEA and Publisher, whether oral or written, with respect
to the subject matter hereof  including any  PlayStation 2  Confidentiality  and
Nondisclosure Agreement and Materials Loan Agreement between SCEA and Publisher.

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

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


-------------------
*    Confidential portion omitted and filed separately with the Commission.


                                       24
<PAGE>

                                                                    CONFIDENTIAL

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           THE 3DO COMPANY
INC.

By: /S/ Phil Harrison                         By: /S/ James Alan Cook
  ------------------------------------            ------------------------------

Print Name: Phil Harrison                     Print Name: James Alan Cook
            --------------------------                    ----------------------

Title: Vice President                         Title: Executive Vice President
       -------------------------------               ---------------------------

Date: 4/10/2000                               Date: April 7, 2000
      --------------------------------              ----------------------------

NOT AN AGREEMENT UNTIL
EXECUTED BY BOTH PARTIES