CONFIDENTIAL

                                                                   Exhibit 10.35

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.

                  PLAYSTATION 2(R) LICENSED PUBLISHER AGREEMENT

THIS  AGREEMENT  RELATES  TO THE  PUBLISHING  OF  APPLICATION  SOFTWARE  FOR THE
PLAYSTATION(R)  2  COMPUTER  ENTERTAINMENT  SYSTEM.  ALL TERMS  USED  HEREIN ARE
SPECIFIC  TO  THE   PLAYSTATION(R)  2  SYSTEM  AND  NOT  TO  SONY'S  PREDECESSOR
"PLAYSTATION" VIDEO ENTERTAINMENT SYSTEM. PUBLISHING RIGHTS FOR SUCH PREDECESSOR
SYSTEM ARE SUBJECT TO SEPARATE  AGREEMENTS  WITH SCEE, AND ANY LICENCE OF RIGHTS
TO PUBLISHER  UNDER SUCH SEPARATE  AGREEMENTS  SHALL NOT CONFER ON PUBLISHER ANY
RIGHTS IN RELATION TO THE PLAYSTATION(R) 2 SYSTEM, OR VICE VERSA.

   This Agreement is entered into the 13th day of December 2000 by and between

                   SONY COMPUTER ENTERTAINMENT EUROPE LIMITED
                       of 30 Golden Square, London WlF 9LD
                       (hereinafter referred to as "SCEE")

                                     - and -

                               3DO EUROPE LIMITED
                     of 21-23 Mossop Street, London SW3 2LY
                    (hereinafter referred to as "Publisher")
                         PUBLISHER AUTHORISATION #: 136

         Whereas


         (A) SCEE, 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 part (hereinafter  jointly and severally referred to as "Sony")
have developed,  and are licensing core components of, a computer  entertainment
system known and hereinafter  referred to as "PlayStation 2", and are the owners
of, or have the right to grant licenses of, certain proprietary  information and
intellectual property rights pertaining to PlayStation 2.


         (B) Publisher desires to be granted a non-exclusive  license to market,
distribute and sell Licensed Products (as defined below),  and for such Licensed
Products  and  associated   materials  to  be   manufactured  by  an  authorised
manufacturing  facility  licensed  by SCEE,  on the  terms  and  subject  to the
conditions set forth in this Agreement.

         (C) SCEE is willing, on the terms and subject to the conditions of this
Agreement, to grant Publisher the desired non-exclusive licence.

         Now therefore,  in consideration of the  undertakings,  representations
and warranties given herein,  and of other good and valuable  consideration  the
receipt and  sufficiency  of which is  acknowledged,  Publisher  and SCEE hereby
agree as follows:


<PAGE>

                                                                    CONFIDENTIAL

         1. Definitions

            1.1  "Licensed   Products"  means   PlayStation  2  format  Software
product(s)  in uniquely  marked or coloured  CD-ROM or DVD-ROM  format  software
discs (hereinafter referred to as "PlayStation 2 Discs").

            1.2 "Licensed Territory" means the countries specified in
Schedule 1.

            1.3 "Sony Intellectual Property Rights" means all current and future
worldwide  patents,  pending patent  applications and other patent rights (under
licence or  otherwise),  copyrights,  trademarks,  service  marks,  trade names,
semi-conductor topography rights, trade secret rights, technical information and
know-how (and the  equivalents  of each of the  foregoing  under the laws of any
jurisdiction) of Sony pertaining to Sony Materials and/or PlayStation 2, and all
other proprietary or intellectual property rights worldwide (including,  without
limitation,  all  applications and  registrations  with respect thereto) of Sony
pertaining  to  Sony  Materials  and/or  PlayStation  2,  and all  renewals  and
extensions thereof.

            1.4  "PlayStation 2 format Software" means  Publisher's  object code
software,  which includes Licensed  Developer Software and any software (whether
in object code or source code form) which is provided by SCEE and intended to be
combined with Licensed Developer Software for execution on PlayStation 2 and has
the ability to communicate with the software resident in PlayStation 2.

            1.5 "Term" means the period from the date hereof until 31 March 2003
and continuing  thereafter  unless and until terminated by not less than 1 (one)
month's  notice on either side given to expire on such date or any subsequent 31
March.

            1.6 "Affiliate of SCEE" means,  as applicable,  either Sony Computer
Entertainment Inc. in Japan, Sony Computer Entertainment America Inc. in the USA
or such other Sony Computer  Entertainment  entity as may be established by Sony
from time to time.

            1.7 "LDA 2" means the  PlayStation  2 Licensed  Developer  Agreement
between Licensed  Developer of the applicable  PlayStation 2 format Software and
SCEE  (or  an  equivalent  such  agreement  between  Licensed  Developer  and an
Affiliate of SCEE).

            1.8 "Licensed Trademarks" means the "PS" family logo and PlayStation
2 logotype and such other  trademarks,  service  marks,  trade dress,  logos and
other icons or indicia as shall be specified in the  Specifications or otherwise
designated by SCEE from time to time.  SCEE may amend such  Licensed  Trademarks
upon reasonable notice to Publisher.

         Publisher  is  not  authorised  to  use  the   PlayStation,   PSone  or
PlayStation.com  logos  and/or  logotypes,  or the "PS2" or  PlayStation  Shapes
devices,  other than as  expressly  permitted  by  separate  agreement.  Nothing
contained in this  Agreement  shall in any way grant  Publisher the right to use
the trademark  "Sony" in any manner as (or as part of) a trademark,  trade name,
service mark or logo or otherwise howsoever.

            1.9 "Licensed  Developer"  means Publisher or such other third party
as shall have developed  Licensed  Developer  Software and  PlayStation 2 format
Software pursuant to a then current LDA 2.

            1.10 "Sony Materials" means any hardware,  data, object code, source
code,  documentation  (or  any  part(s)  of any of the  foregoing)  and  related
peripheral items provided to the Licensed

                                      -2-

<PAGE>

                                                                    CONFIDENTIAL

Developer of any PlayStation 2 format Software  pursuant to the LDA 2 applicable
for such PlayStation 2 format Software.

            1.11  "Licensed  Developer  Software"  means  Licensed   Developer's
application source code and data (including audio and visual material) developed
by Licensed  Developer in accordance with its LDA 2 which,  when integrated with
any  software  (whether in object  code or source  code form)  provided by SCEE,
creates PlayStation 2 format Software.

            1.12 "Printed Materials" means all artwork and mechanicals to be set
forth on the Licensed  Product  itself,  and on the  PlayStation 2 box (or other
container)  and, if  applicable,  the box (or other)  packaging for the Licensed
Product and all instruction manuals,  inlays,  inserts,  stickers and other user
information  and/or materials to be inserted in or affixed to such PlayStation 2
box and/or packaging.

            1.13 "Advertising  Materials" means all advertising,  merchandising,
promotional and display materials of or concerning the Licensed Products.

            1.14  "Manufactured  Materials"  means  all  units  of the  Licensed
Products,  of the Printed  Materials  to be set forth on the  Licensed  Products
themselves  and of the  PlayStation  2 boxes for such Licensed  Products  (which
expression shall include any alternative form of container for Licensed Products
subsequently introduced by SCEE).

            1.15  "Specifications"  means such  specifications  relating  to the
content and/or manufacture of Licensed Products, Printed Materials,  Advertising
Materials  and/or related  matters or materials as may be issued by Sony,  which
specifications (and/or procedures relating to the testing or verification of all
such  materials for  conformity  to the  Specifications  and/or  relating to the
ordering and manufacture of Licensed  Products and associated  materials) may be
amended from time to time upon reasonable notice to Publisher.

            1.16 "CNDA" means the  Confidentiality & Non-Disclosure (or similar)
Agreement  between  Publisher  and  SCEE or an  Affiliate  of SCEE  relating  to
PlayStation  2 and to  Confidential  Information  of Sony  and/or  of  Publisher
thereunder.

            1.17  "Confidential  Information  of Sony" means the content of this
Agreement  (including  the  Schedules  hereto  and the  Specifications)  and all
confidential and/or proprietary information,  documents and related materials of
whatever  nature  (including,   without  limitation  all  processes,   hardware,
software,   inventions,  trade  secrets,  ideas,  designs,  research,  know-how,
business methods, production plans and marketing plans) concerning PlayStation 2
developed  or owned by,  licensed to or under the  control of Sony and,  without
limitation,  information  otherwise  related  to  Sony's  technology,  know-how,
products,  potential products,  research projects,  promotional  advertising and
marketing plans,  schedules and budgets,  licensing terms and pricing,  customer
lists and details, commercial relationships or negotiations, services, financial
models and other  business  information,  whether  relating to  PlayStation 2 or
otherwise  including,  unless  covered  by a separate  Non-Disclosure  Agreement
between Publisher and SCEE, relating to Sony's  "PlayStation"  predecessor video
entertainment   system   disclosed  by  whatever  means,   whether  directly  or
indirectly,  by or on behalf of Sony to Publisher at any time, whether disclosed
orally, in writing or in machine-readable or other form, or otherwise discovered
by  Publisher as a result of any  information  or  materials  provided  (whether
directly or indirectly) by or on behalf of Sony to Publisher.

            1.18  "Confidential  Information  of  Publisher"  means  any and all
confidential and/or proprietary information,  documents and related materials of
whatever nature (including, without limitation all



                                       -3-
<PAGE>

                                                                    CONFIDENTIAL

processes,  hardware,  software,  inventions,  trade  secrets,  ideas,  designs,
research,  know-how,  business  methods,  production  plans and marketing plans)
concerning  PlayStation 2 format Software  developed or owned by, licensed to or
under the control of Publisher and, without  limitation,  information  otherwise
related to  Publisher's  technology,  know-how,  products,  potential  products,
research projects,  promotional  advertising and marketing plans,  schedules and
budgets,  licensing  terms and pricing,  customer lists and details,  commercial
relationships  or  negotiations,  services,  financial models and other business
information,  whether  relating  to  PlayStation  2 or  otherwise  disclosed  by
whatever means, whether directly or indirectly,  by or on behalf of Publisher to
SCEE at any time, whether disclosed orally, in writing or in machine-readable or
other form, or otherwise  discovered by SCEE as a result of any  information  or
materials provided (whether directly or indirectly) by or on behalf of Publisher
to SCEE,  which  information  is designated by Publisher as, or becomes known to
SCEE under  circumstances  indicating that such information is,  confidential or
proprietary.

            1.19 "Third Party  Intellectual  Property  Rights" means all current
and future  patents  worldwide,  pending  patent  applications  and other patent
rights (under  licence or  otherwise),  copyrights,  trademarks,  service marks,
trade names,  semi-conductor  topography rights, trade secret rights,  technical
information and know-how (and the equivalents of each of the foregoing under the
laws of any  jurisdiction)  of any third party other than  Publisher or Sony and
all other  proprietary or  intellectual  property rights  worldwide  (including,
without  limitation,  all applications and registrations  with respect thereto),
and all renewals and extensions thereof.


            1.20 "Article 6" means Article 6 of Council Directive  91/250/EEC of
14 May 1991 on the legal protection of computer programmes.

         2. Grant of Licence

         SCEE hereby grants to Publisher,  and Publisher hereby accepts,  within
the Licensed  Territory only and under the Sony Intellectual  Property Rights, a
non-exclusive non-transferable licence, without the right to sub-license (except
as specifically  provided herein),  to publish  PlayStation 2 format Software in
such  genres or  categories  as SCEE  shall from time to time  designate  in the
Specifications,  and the right and obligation to use the Licensed Trademarks, in
the  form  and  manner  prescribed  in the  Specifications,  strictly,  only and
directly in connection with such publication.  For these purposes,  to "publish"
shall mean any or all of the following:  (i) produce  Advertising  Materials and
Printed  Materials;  (ii) to  issue to SCEE  purchase  orders  for  Manufactured
Materials  as  prescribed  in Clause 6;  (iii) to  market,  distribute  and sell
Licensed Products (and to authorise others so to do); and (iv) to sub-license to
end users the right to use Licensed  Products for  non-commercial  purposes only
and not for public performance.

         3. Limitations

            3.1 Subject always to Article 6, Publisher shall publish PlayStation
2  format  Software  only if  developed  by a  Licensed  Developer  strictly  in
accordance with all the terms and conditions of such Licensed  Developer's LDA 2
and shall not  publish  or  attempt to  publish  any other  software  whatsoever
intended for or capable of execution on  PlayStation  2. The onus of  evidencing
that PlayStation 2 format Software  satisfies the foregoing  criteria shall rest
on  Publisher  and SCEE  reserves  the right to  require  Publisher  to  furnish
evidence satisfactory to SCEE that the foregoing criteria are satisfied.

            3.2  Publisher  shall not  publish  outside the  Licensed  Territory
PlayStation 2 format Software unless and until Publisher shall be authorised and
licensed so to do pursuant to a current  licence  agreement  with the applicable
Affiliate of SCEE.  Further,  Publisher shall not sub-publish such PlayStation 2



                                       -4-
<PAGE>

                                                                    CONFIDENTIAL

format  Software  through a third party  either  within or outside the  Licensed
Territory unless and until such  sub-publisher  shall be authorised and licensed
so to do either pursuant to a current PlayStation 2 Licensed Publisher Agreement
with  SCEE or a current  PlayStation  2 licence  agreement  with the  applicable
Affiliate of SCEE.

            3.3 The  licence  granted  in  this  Agreement  extends  only to the
publication,  marketing,  distribution  and sale of  Licensed  Products  in such
formats as may be designated  by SCEE.  Without  limiting the  generality of the
foregoing and except as otherwise provided herein, Publisher and, if applicable,
its  sub-publishers  shall  at all  times  and in all  territories  be  strictly
prohibited from  undertaking or authorising the  distribution or transmission of
PlayStation 2 format Software or Licensed  Products through  electronic means or
any other means now known or hereafter  devised,  including without  limitation,
via wireless,  cable, fiber optic means, telephone lines, microwave and/or radio
waves,  or  over  a  network  of  interconnected  computers  or  other  devices.
Notwithstanding   this  limitation,   Publisher  may   electronically   transmit
PlayStation 2 format 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 or  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  unauthorised
interception or retransmission of such transmissions.

         For  the  avoidance  of  doubt,  the  foregoing  shall  apply  only  to
PlayStation  2 format  Software and to Licensed  Products and shall not apply to
Licensed  Developer  Software which does not utilise Sony Materials  and/or Sony
Intellectual  Property Rights and/or,  subject to Council Directive  91/250/EEC,
Confidential  Information of Sony.

            3.4 Subject only to Article 6,  Publisher  and, if  applicable,  its
sub-publishers  shall at all times be strictly  prohibited from disassembling or
decompiling  software,  peeling  semiconductor  components or otherwise  reverse
engineering  or attempting  to reverse  engineer or derive source code or create
derivative  works  from  PlayStation  2  format  Software,  from  permitting  or
encouraging  any third party so to do, and from acquiring or using any materials
from any third  party  who does so.  Publisher  shall in all cases be  primarily
liable for the payment of Platform  Charge to SCEE in  accordance  with Clause 7
hereof in respect of any product published by Publisher, or, if applicable,  any
of its  sub-publishers,  which utilises Sony Materials and/or Sony  Intellectual
Property Rights and/or,  subject to Council Directive  91/250/EEC,  Confidential
Information  of Sony.  The onus of  evidencing  that any such  product is not so
published  shall  rest on  Publisher  and SCEE  reserves  the  right to  require
Publisher to furnish  evidence  satisfactory  to SCEE that the applicable of the
foregoing criteria are satisfied.

            3.5  Publisher   shall  inform  all  such   sub-publishers   of  the
obligations imposed by this Agreement and shall obtain their commitment to abide
by the same.


            3.6 Any  breach  of the  provisions  of  this  Clause  3 shall  be a
material breach of this Agreement not capable of remedy.

         4. Reservations

            4.1 This  Agreement  does not grant any right or licence,  under any
Sony  Intellectual  Property Rights or otherwise,  except as expressly  provided
herein,  and no other right or licence is to be implied by or inferred  from any
provision  of this  Agreement or the conduct of the parties  hereunder.  Subject
only to the rights of  Publisher  under  this  Agreement,  all right,  title and
interest in and to the Sony Materials and the Sony Intellectual  Property Rights
are and shall be the exclusive property of Sony, and Publisher shall



                                       -5-
<PAGE>

                                                                    CONFIDENTIAL

not make use of, or do or cause to be done any act or thing contesting or in any
way impairing or tending to impair any of Sony's right,  title or interest in or
to, any of the Sony Materials, Sony Intellectual Property Rights,  PlayStation 2
and/or Sony's  "PlayStation"  predecessor video  entertainment  system except as
authorised by and in compliance  with the provisions of this Agreement or as may
otherwise  expressly be authorised in writing by Sony; provided however that the
foregoing shall not be taken to preclude Publisher from challenging the validity
of any Sony  Intellectual  Property Rights.  No right,  licence 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.  No  promotional  or novelty  items or premium
products  (including,  by way of illustration but without limitation,  T-shirts,
posters,  stickers, etc.) displaying or depicting any of the Licensed Trademarks
shall be developed, manufactured, marketed, sold and/or distributed by, with the
authority of or on behalf of,  Publisher  without the prior written  consent and
authorisation of SCEE in each case.

            4.2 The Licensed  Trademarks and the goodwill  associated  therewith
are and shall be the  exclusive  property  of Sony.  Nothing  herein  shall give
Publisher any right, title or interest in or to any of the Licensed  Trademarks,
other than the  non-exclusive  licence  and  privilege  to  display  and use the
Licensed  Trademarks solely in accordance with the provisions of this Agreement.
Publisher shall not do or cause to be done any act or thing contesting or in any
way impairing or tending to impair any of Sony's right,  title or interest in or
to any of the  Licensed  Trademarks,  nor shall  Publisher  register or apply to
register  any  trademark  in its own name or in the name of any other  person or
entity,  or obtain or seek to obtain rights to employ Internet domain name(s) or
address(es),  which is or are similar to or is or are likely to be confused with
any of the Licensed Trademarks; provided however that the foregoing shall not be
taken to preclude  Publisher  from  challenging  the  validity  of any  Licensed
Trademarks.

            4.3  Publisher or Licensed  Developer  (as  applicable)  retains all
right,  title and  interest in and to  Licensed  Developer  Software,  including
Licensed Developer's intellectual property rights therein and any names or other
designations  used as titles  therefor,  and nothing in this Agreement  shall be
construed  to restrict  the right of Licensed  Developer  to develop  and/or the
right of Publisher to publish products incorporating Licensed Developer Software
(separate  and apart  from Sony  Materials),  and/or  under  such names or other
designations, for any hardware platform or service other than PlayStation 2.

            4.4 Subject to the  proviso to Clauses 4.1 and 4.2 above,  Publisher
shall,  at the  expense  of SCEE,  take all  such  steps as SCEE may  reasonably
require,  including the execution of licences and registrations,  to assist SCEE
in maintaining the validity and  enforceability  of Sony  Intellectual  Property
Rights.

            4.5  Without   prejudice  to  Clause  11,   Publisher  or  SCEE  (as
applicable)  shall  promptly  and fully notify the other in writing in the event
that it  discovers  or  otherwise  becomes  aware of any actual,  threatened  or
suspected  infringement of any of the intellectual  property or trademark rights
of the  other  embodied  in any of the  Licensed  Products,  and of any claim of
infringement   or  alleged   infringement  by  the  other  of  any  Third  Party
Intellectual  Property Rights, and shall at the request and expense of the other
do all such things as may  reasonably  be required to assist the other in taking
or resisting any  proceedings in relation to any such  infringement or claim.

         5. Quality Standards

            5.1   Publisher   shall   provide  SCEE  with  a  Product   Planning
Notification for each Licensed Product in accordance with the Specifications.


                                       -6-
<PAGE>

                                                                    CONFIDENTIAL

         Each  Licensed  Product,  including  without  limitation  the title and
content thereof, and/or Publisher's use of any of the Licensed Trademarks, shall
be  required  to  conform  to  the  Specifications  and  shall  not,  except  as
specifically  authorised in writing by SCEE in each case,  incorporate (in whole
or in part) more than 1 (one) game product.

         TESTING OR VERIFICATION FOR CONFORMITY TO THE  SPECIFICATIONS  SHALL BE
CONDUCTED  BY SCEE OR,  AT  PUBLISHER'S  ELECTION,  BY AN  INDEPENDENT  EXTERNAL
TESTING  SERVICE (IF AND WHEN SUCH SERVICE  BECOMES  AVAILABLE).

            5.2  Publisher  shall  submit  for  testing  for  conformity  to the
Specifications  such  information  and materials  relating to the  PlayStation 2
format  Software  for  each  Licensed  Product  as  shall  be  specified  in the
Specifications.  Such Specifications shall be comparable with the specifications
applied by Sony with respect to its own PlayStation 2 format Software  products.
SCEE  acknowledges and agrees that such  Specifications  shall be of prospective
application only and shall not be applied to any inventory units of the Licensed
Products  manufactured  prior to, or in the active process of manufacture at the
date of, the promulgation thereof by SCEE.


            5.3 For each Licensed  Product,  Publisher shall be responsible,  at
Publisher's expense,  for the origination of all Printed Materials,  and for the
manufacture  and delivery to the  manufacturer  of such Licensed  Product of all
Printed  Materials  other  than  those to be set forth on the  Licensed  Product
itself,  all of which  Printed  Materials  shall:  (i)  conform in all  material
respects to the Specifications; and (ii) include such other materials (including
by way of illustration but not limitation,  consumer health warnings in relation
to epilepsy) and such consumer  advisory rating code(s) as may from time to time
be required by any governmental  entity or in compliance with any voluntary code
of practice  operated by members of the  interactive  software  development  and
publishing  community.  The  Specifications  referred  to in (i) above  shall be
comparable  with the  specifications  applied  by Sony with  respect  to its own
PlayStation 2 format Software  products.  SCEE acknowledges and agrees that such
Specifications shall be of prospective application only and shall not be applied
to any inventory units of the Licensed Products manufactured prior to, or in the
active  process of  manufacture at the date of, the  promulgation  thereof.  All
materials to be submitted pursuant to this Clause 5.3 shall be delivered by such
means  and in such  form as shall be  prescribed  in the  Specifications  and at
Publisher's sole risk and expense. Publisher undertakes that the quality of such
Printed  Materials  shall be of the same  quality as that  associated  with high
quality consumer products.

            5.4 Where  applicable,  SCEE (or, where  applicable,  an independent
external testing service as aforesaid) will test or verify for conformity to the
Specifications  (as the  case  may  be) all  materials  submitted  by  Publisher
pursuant to Clause 5.2 and Clause 5.3.  Where such  testing or  verification  is
conducted by SCEE, SCEE shall advise Publisher of the results of such testing or
verification   within  the  applicable  of  the  timeframes   specified  in  the
Specifications.  Where  such  testing  or  verification  is  conducted  by  such
independent external testing service, such service shall advise Publisher of the
results of such testing or verification  within  timeframes  agreed between such
service  and  Publisher  (and SCEE shall  have no  responsibility  or  liability
whatsoever  arising from a failure by such service to meet such timeframes).  If
any of such  materials  (or any  element(s)  thereof)  fail  to  conform  to the
Specifications,  SCEE (or, where applicable,  such independent  external testing
service) shall specify the reasons for such failure and state what revisions are
required to enable such materials (or element(s)  thereof) to so conform.  After
making the required  revisions,  Publisher may resubmit  such  materials in such
revised form for re-testing or  re-verification  by SCEE (or, where  applicable,
such independent  external testing  service).  The procedures  described in this
Clause 5.4 shall if  necessary  be repeated  until all such  materials  for each
Licensed  Product  shall  expressly  have been  certified as  conforming  to the
Specifications,  such  certification  to be validly given only if in


                                       -7-
<PAGE>

                                                                    CONFIDENTIAL

writing and signed by the duly authorised representative(s) of SCEE as specified
in  the   Specifications   (or,  where   applicable,   by  the  duly  authorised
representative(s) of such independent external testing service). SCEE shall have
no liability to Publisher  for the accuracy or content  (including  translations
and  localisations)  of Printed  Materials  (except  only items  required  to be
included in accordance with the  Specifications) or in respect of costs incurred
or  irrevocably  committed by Publisher as a result of any failure to conform to
Specifications  (even where  certified for  conformity) or in relation to, or to
the use of, Printed  Materials  which shall not have been given a certificate of
conformity by SCEE (or, where applicable,  by such independent  external testing
service).  No production  units of any Licensed  Product shall be  manufactured,
marketed,  distributed  or sold  by,  with the  authority  of or on  behalf  of,
Publisher  unless and until such a  certificate  of  conformity of such Licensed
Product  shall  first have been  given by SCEE (or,  where  applicable,  by such
independent  external testing  service).  No certificate of conformity from SCEE
(or, where  applicable,  from such independent  external testing service) of any
element  of the  materials  so  submitted  or  resubmitted  shall  be  deemed  a
certificate of conformity of any other element of such materials,  nor shall any
such certificate of conformity be deemed to constitute a waiver of any of SCEE's
rights under this Agreement.

         The  generality  of the  foregoing  notwithstanding,  in the event that
Publisher  wishes  to  contest  a  finding  by  SCEE  of  non-conformity  to the
Specifications,   and  as  an  alternate  to  making   required   revisions  and
resubmissions  as above,  Publisher  may have  recourse to the  appeals  process
specified in the Specifications.

            5.5  Publisher  shall not change in any material  respect any of the
materials  for which a certificate  of conformity  shall have been given by SCEE
(or, where applicable,  by an independent  external testing service) pursuant to
Clause 5.4 (or, if applicable,  pursuant to Clause 5.6) (or, alternately,  which
shall have been held to  conform to the  Specifications  following  recourse  by
Publisher to the appeals process specified in the Specifications). If any of the
Licensed Products and/or related  materials  published by, with the authority of
or on  behalf  of,  Publisher  fail to  conform  to the  Specifications  and the
materials  for which  SCEE (or,  where  applicable,  such  independent  external
testing service) shall from time to time have given a certificate of conformity,
then the  provisions of Clause 13.2 shall apply.

            5.6 SCEE reserves the right to require that  pre-production  samples
of all  Advertising  Materials  shall be  submitted  by Publisher to SCEE or, at
Publisher's  election,  to an independent  external testing service (if and when
such  service  becomes  available),  free of charge and in  accordance  with the
procedure  specified in the  Specifications,  for verification for conformity to
the Specifications (including specifically,  but without limitation, in relation
to the usage of any of the Licensed Trademarks), prior to any actual production,
use or  distribution  of any such items by, with the  authority or on behalf of,
Publisher.  No such proposed  Advertising  Materials shall be produced,  used or
distributed  directly or  indirectly  by  Publisher  without  first  obtaining a
certificate  of conformity to the  Specifications.  Where such  verification  is
conducted  by  SCEE,  SCEE  shall  advise  Publisher  of  the  results  of  such
verification   within  the  applicable  of  the  timeframes   specified  in  the
Specifications.  Where  such  verification  is  conducted  by  such  independent
external testing service,  such service shall advise Publisher of the results of
such  verification  within  timeframes agreed between such service and Publisher
(and SCEE shall have no  responsibility or liability  whatsoever  arising from a
failure  by such  service  to meet  such  timeframes).  If any such  Advertising
Materials (or any  element(s)  thereof)  fail to conform to the  Specifications,
SCEE (or, where  applicable,  such  independent  external testing service) shall
specify the reasons for such  failure and state what  revisions  are required to
enable such Advertising  Materials (or element(s)  thereof so to conform.  After
making the required  revisions,  Publisher may resubmit  such  materials in such
revised  form  for  re-verification  by  SCEE  (or,  where  applicable,  by such
independent  external testing service).  The procedures described in this Clause
5.6 shall if necessary be repeated until all such Advertising Materials for each
Licensed  Product  shall



                                       -8-
<PAGE>

                                                                    CONFIDENTIAL

expressly  have  been  certified  as  conforming  to  the  Specifications,  such
certification  to be validly  given  only if in  writing  and signed by the duly
authorised  representative(s)  of SCEE as specified in the  Specifications  (or,
where applicable,  by the duly authorised  representative(s) of such independent
external testing service).  SCEE shall have no liability to Publisher in respect
of costs  incurred or  irrevocably  committed by Publisher in relation to, or to
the use of, Advertising  Materials which shall not have been given a certificate
of  conformity  by SCEE (or,  where  applicable,  by such  independent  external
testing service).  No certificate of conformity from SCEE (or, where applicable,
from such  independent  external  testing service) of any element of Advertising
Materials  so  submitted  or  resubmitted  shall  be  deemed  a  certificate  of
conformity of any other  element of such  Advertising  Materials,  nor shall any
such certificate of conformity be deemed to constitute a waiver of any of SCEE's
rights under this Agreement.

         The  generality  of the  foregoing  notwithstanding,  in the event that
Publisher wishes to contest a finding of non-conformity to the Specifications by
SCEE,  and as an alternate to making  required  revisions and  resubmissions  as
above,  Publisher  may have  recourse to the appeals  process  specified  in the
Specifications.

         Subject  in  each  instance  to the  prior  written  consent  of  SCEE,
Publisher may use such textual and/or pictorial  advertising  matter (if any) as
may be created by, with the  authority or on behalf of, Sony  pertaining  to the
Sony Materials and/or to the Licensed  Trademarks on such Advertising  Materials
as may, in Publisher's  judgment,  promote the sale of Licensed  Products within
the  Licensed  Territory.  Sony  shall have the right to use  Licensed  Products
and/or other  materials  relating to Publisher's  PlayStation 2 format  Software
titles in any  advertising  or promotion for  PlayStation  2 at Sony's  expense,
subject to giving  Publisher  reasonable  prior notice of such  advertisement or
promotion.  Sony shall  confer  with  Publisher  regarding  the text of any such
advertisement.  If  required  by  Sony  and/or  any  governmental  entity  or in
compliance  with any  voluntary  code of  practice  operated  by  members of the
interactive software development and publishing  community,  Publisher shall, at
Publisher's cost and expense, also include consumer advisory rating code(s) and,
if  required,  other  materials  (including  by  way  of  illustration  but  not
limitation,  consumer  health  warnings in relation to  epilepsy) on any and all
Advertising  Materials used in connection with Licensed Products.  Such consumer
advisory  rating code(s) shall be procured in accordance  with the provisions of
Clause 5.7.

            5.7 Publisher  agrees that, if required by SCEE or any  governmental
entity,  it shall submit each Licensed  Product to a consumer  advisory  ratings
system  designated  by SCEE 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) thereby
procured  shall  be  displayed  on  Licensed  Products  and  associated  Printed
Materials  in  accordance  with  the  Specifications,  at  Publisher's  cost and
expense.

            5.8 In the event  Publisher  fails to comply with its obligations in
relation thereto as specified in Clause 5.7, SCEE reserves the right in its sole
discretion,  at Publisher's sole cost and expense: (i) to display, or to require
the display,  on Licensed  Products and/or  associated  Printed Materials and/or
associated  Advertising  Materials (as may be required) materials  (including by
way of illustration but not limitation,  consumer health warnings in relation to
epilepsy)  and/or to procure  and to  display,  or to require  the  display  of,
consumer  advisory rating  code(s);  or (ii) to require  non-complying  Licensed
Products and/or  associated  Printed  Materials  and/or  associated  Advertising
Materials forthwith to be withdrawn from the market.


                                       -9-
<PAGE>

                                                                    CONFIDENTIAL

         6. Manufacture of Licensed Products & Associated Materials

            6.1 Subject  only to Article 6,  Publisher  acknowledges  and agrees
that  it  shall  purchase   Manufactured   Materials  only  from  an  authorised
manufacturing  facility  licensed  by SCEE.  SCEE shall  have the right,  but no
obligation,  to subcontract  the whole or any part or phase of the production of
any or all of the Manufactured Materials or any part(s) thereof.


            6.2 Subject  always to Article 6,  promptly  following the giving by
SCEE (or,  where  applicable,  by an  independent  external  testing  service as
aforesaid)  of  a  certificate   of  conformity  to  the   Specifications   (or,
alternately, a holding of conformity to the Specifications following recourse by
Publisher  to the appeals  process  specified  in the  Specifications)  for each
Licensed  Product  pursuant to Clause 5.2, SCEE shall create (from one of the CD
copies of the finally  approved  version of the PlayStation 2 format Software as
submitted by Publisher pursuant to Clause 5.2) the original master PlayStation 2
Disc  ("Master  PlayStation 2 Disc") from which all other copies of the Licensed
Product are to be replicated in compliance with the Specifications  effective at
the time of replication.  Where such  certificate of conformity  shall have been
given by such an independent  external testing service,  then the CD copy of the
finally  approved  version of the  PlayStation 2 format Software as submitted by
Publisher  pursuant to Clause 5.2 from which the Master PlayStation 2 Disc is to
be  created  shall  be  furnished  SCEE  by such  service.  Publisher  shall  be
responsible  for the costs,  as set forth in Schedule 2, of creating such Master
PlayStation 2 Disc.  Publisher will retain  duplicates of all such PlayStation 2
format Software. SCEE shall not be liable for loss of or damage to any copies of
the  PlayStation 2 format Software  furnished SCEE  hereunder.  There will be no
technology  exchange  between  Sony and  Publisher  under  this  Agreement.  The
mastering process being of a proprietary and commercially  confidential  nature,
neither  SCEE  nor any  manufacturing  subcontractor  of  SCEE  will  under  any
circumstances  release  any  Master  PlayStation  2 Discs  or  other  in-process
materials to Publisher. All such physical materials shall be and remain the sole
property of Sony.

            6.3  Subject  always  to  Article  6,  Publisher   shall  be  solely
responsible  for the delivery,  direct to an authorised  manufacturing  facility
licensed by SCEE and in  accordance  with Clause 6.4,  110% (one hundred and ten
percent)  of the number of sets of the Printed  Materials  (other than those set
forth on the applicable Licensed Product itself) required to fulfill Publisher's
purchase order for Manufactured  Materials of each PlayStation 2 format Software
title,   which  Printed  Materials  shall  be  in  strict  compliance  with  the
Specifications.   SCEE  shall,  at  Publisher's  request,   give  Publisher  all
reasonable  assistance in arranging the  manufacture of Printed  Materials to be
used in  conjunction  with  Licensed  Products not  manufactured  in reliance on
Article 6 through SCEE's authorised  manufacturing facility (if a Sony company),
but SCEE shall have no responsibility  with respect to pricing,  delivery or any
other related matter whatsoever in connection with such manufacture.

            6.4 Subject to the giving by SCEE of a certificate  of conformity to
the Specifications (or, alternately,  a holding of conformity following recourse
by Publisher to the appeals  process  specified in the  Specifications)  for the
applicable  PlayStation  2 format  Software  and Printed  Materials  pursuant to
Clause 5, and to the delivery to an authorised  manufacturing  facility licensed
by SCEE of the  materials  to be  delivered  under  Clause  6.3,  SCEE will,  at
Publisher's  expense  and as  applicable,  manufacture,  assemble,  package  and
deliver the Manufactured  Materials and the Printed Materials in accordance with
the  terms  and  conditions  set forth in this  Clause  6. The  delivery  of the
materials specified in Clause 6.3 shall be made in accordance with the timetable
for such delivery specified in the Specifications.


            6.5  Subject  always to Article  6,  Publisher  shall  issue to SCEE
purchase  order(s) via SCEE's Electronic Order System (or otherwise as specified
by SCEE  from  time to time) in  accordance  with,



                                      -10-
<PAGE>

                                                                    CONFIDENTIAL


and in compliance with the timetable specified in, the  Specifications.  No such
order shall be issued unless and until all necessary  certificates of conformity
shall  have been  given  (or,  alternately,  there  shall have been a holding of
conformity  following  recourse by Publisher to the appeals process specified in
the  Specifications)  pursuant  to Clause 5. Each  such  order  shall  reference
Publisher  authorisation  number and purchase order  reference  number,  specify
quantities of  PlayStation 2 format  Software by title by pack sku (in multiples
of the minimum box shipment  detailed in the  Specifications),  state  requested
ex-factory delivery date and all packaging  information together with such other
information as SCEE shall reasonably  require and shall be for not less than the
applicable  minimum order  quantity as specified in Schedule 2 hereto.  All such
purchase orders shall be subject to acceptance by SCEE, which acceptance will be
advised to Publisher not more than 3 (three) working days following  delivery in
accordance  with  Clause 6.4 of the  materials  required to be  delivered  under
Clauses  6.2 and 6.3.  SCEE  shall use all  reasonable  endeavours,  subject  to
available  manufacturing  capacity,  to fulfill  Publisher's  purchase orders by
Publisher's  requested  ex-factory  delivery  date  but  does  not in any  event
guarantee so to do.  Publisher  shall have no right to cancel or reschedule  any
purchase  order or reorder (or any portion  thereof)  for any  Licensed  Product
unless the parties shall first have reached  mutual  agreement as to Publisher's
financial liability with respect to any desired  cancellation or rescheduling of
any such purchase order or reorder (or any portion thereof).


            6.6  Subject  only to the  provisions  of Clause 6.5 in  relation to
Printed  Materials,  neither SCEE nor any  manufacturing  subcontractor  of SCEE
shall be under any obligation to store finished units of Manufactured  Materials
or of associated  Printed Materials beyond the actual  ex-factory  delivery date
thereof.  Delivery  of  Manufactured  Materials  shall  be made  ex-factory  the
applicable  authorised  manufacturing  facility licensed by SCEE in the Licensed
Territory.  All risk of loss or damage in  transit  to any and all  Manufactured
Materials  manufactured  by SCEE  pursuant to  Publisher's  orders shall pass to
Publisher forthwith upon first handling by Publisher's carrier.

            6.7  Publisher  may  inspect  and  test any  units  of  Manufactured
Materials not  manufactured  in reliance on Article 6 at  Publisher's  receiving
destination.  Any finished units of such  Manufactured  Materials  which fail to
conform  to the  Specifications  and/or  any  description(s)  contained  in this
Agreement may be rejected by Publisher by providing  written notice of rejection
to SCEE  within 30 (thirty)  days of receipt of such units of such  Manufactured
Materials at Publisher's receiving destination. In such event, the provisions of
Clause 10.2 shall apply with respect to any such rejected units of  Manufactured
Materials.  Notwithstanding the provisions of Clause 10.2, if Publisher fails to
reject any units of such Manufactured  Materials in the manner and within the 30
(thirty) day period prescribed above, such units of Manufactured Materials shall
irrevocably  be deemed  accepted  by  Publisher  and shall not  subsequently  be
rejected.

            6.8 In no circumstances  shall SCEE or its authorised  manufacturing
facility  treat any of  Publisher's  Licensed  Products  in any way more or less
favourably,  in terms of  production  turnaround  times or  otherwise,  than the
Licensed Products of any other Licensed  Publisher of SCEE or than PlayStation 2
format Software  products  published by SCEE itself.

         7. Platform Charge


            7.1 The all-in  Platform  Charge for finished units of  Manufactured
Materials  in  respect  of which  SCEE  accepts  Publisher's  purchase  order in
accordance  with Clause 6.5 shall be as specified  in Schedule 2. Such  Platform
Charge shall be subject to change by SCEE at any time upon reasonable  notice to
Publisher;  provided,  however,  that such Platform  Charge shall not be changed
with respect to any units of Manufactured  Materials which are the subject of an
effective  purchase  order or reorder but which have not yet been  delivered  by
SCEE. Such Platform Charge for finished




                                      -11-
<PAGE>

                                                                    CONFIDENTIAL

units of Manufactured Materials is exclusive of any value-added or similar sales
tax, customs and excise duties and other similar taxes or duties, which SCEE may
be  required  to  collect or pay as a  consequence  of the sale or  delivery  of
finished units of Manufactured Materials.  Publisher shall be solely responsible
for the  payment or  reimbursement  of any such taxes or duties,  and other such
charges or assessments  applicable to the sale and/or purchase of finished units
of Manufactured Materials.


         The Platform  Charge for products  developed  utilising  Sony Materials
and/or Sony  Intellectual  Property Rights and/or,  subject to Council Directive
91/250/EEC,  Confidential  Information of Sony, but  manufactured in reliance on
Article 6, shall be the otherwise  applicable Platform Charge less only such sum
as represents  from time to time the costs of raw  materials and for  production
services  (including  for  utilisation  of  Sony's  proprietary  Disc  Mastering
technology)  for the products  concerned  which SCEE would  otherwise  have been
invoiced  for by  SCEE's  authorised  manufacturing  facility  ("the  Article  6
Platform  Charge").  If Publisher  has products so  manufactured  in reliance an
Article 6, then  Publisher  shall  furnish SCEE,  within 28 (twenty  eight) days
following  the close of each  calendar  month:  (i) a written  reporting  of the
number of inventory units (by product title) of products so manufactured  during
such  calendar  month;  (ii)  an  external  auditor's  certificate  (or  similar
independent   certificate   reasonably   acceptable  to  SCEE)   confirming  the
completeness and accuracy of such reporting;  (iii)  Publisher's  remittance for
the  Article 6  Platform  Charge  multiplied  by the number of  inventory  units
reflected in such  reporting.  Any failure fully and promptly to comply with the
foregoing  reporting and payment  obligations  shall constitute a breach of this
Agreement not capable of remedy,  entitling SCEE forthwith to terminate the Term
pursuant to Clause  13.1(i);  and upon  termination by SCEE for such cause,  the
provisions of Clause 14.2 shall come into effect.


         SCEE shall upon reasonable written request provide Publisher details of
the aforementioned  costs of raw materials and production  services if Publisher
has  legitimately  exercised its rights under Article 6 or genuinely  intends to
exercise and rely upon such rights.  However, SCEE reserves the right to require
Publisher  to execute a separate  Non-Disclosure  Agreement  before  making such
information available.

            7.2 No costs incurred in the  development,  manufacture,  marketing,
sale and/or distribution of Licensed Products and/or associated  materials shall
be deducted from any Platform Charge payable to SCEE hereunder. Similarly, there
shall be no  deduction  from  the  Platform  Charge  otherwise  payable  to SCEE
hereunder as a result of any  uncollectable  accounts owed to Publisher,  or for
any credits,  discounts,  allowances  or returns  which  Publisher may credit or
otherwise  grant to any third party customer in respect of any units of Licensed
Products and/or associated materials,  or for any taxes, fees,  assessments,  or
expenses of any kind which may be incurred by Publisher in  connection  with its
sale and/or  distribution of any units of Licensed  Products  and/or  associated
materials,  and/or  arising  with  respect  to the  payment of  Platform  Charge
hereunder.  Publisher  shall  furnish  SCEE  official tax receipts or other such
documentary  evidence  issued by the  applicable tax  authorities  sufficient to
substantiate  the fact of the  deduction of any  withholding  taxes and/or other
such assessments which may be imposed by any governmental authority with respect
to such  payments  of  Platform  Charge  hereunder  and the  amount of each such
deduction  - and,  in the event  SCEE is able to obtain a  corresponding  credit
against its own tax liability,  Publisher  shall be entitled to a  corresponding
credit against its subsequent purchases of Manufactured Materials hereunder.

            7.3 Publisher shall effect payment for the Platform Charge specified
in Clause 7.1 for the  finished  units of  Manufactured  Materials  the  subject
matter of each purchase order issued  pursuant to Clause 6.5 in accordance  with
the Specifications.  Each delivery of Manufactured  Materials to Publisher shall
constitute a separate sale  obligating  Publisher to pay therefor,  whether said
delivery be whole or partial  fulfillment of any order.  No claim for credit due
to shortage of  Manufactured  Materials  as delivered to carrier will be allowed
unless  it is made  within 5 (five)  working  days from the date of  receipt  at
Publisher's receiving


                                      -12-
<PAGE>

                                                                    CONFIDENTIAL

destination.  Title to Manufactured  Materials the subject of each such purchase
order shall pass to Publisher  only upon payment in full of the Platform  Charge
due in respect  thereof.  The  receipt  and  deposit  by SCEE of any  payment of
Platform  Charge  tendered by or on behalf of Publisher  as  aforesaid  shall be
without  prejudice  to any rights or remedies of SCEE and shall not  restrict or
prevent SCEE from thereafter successfully  challenging the basis for calculation
and/or the accuracy of such payment.  SCEE reserves the right,  upon  reasonable
notice to Publisher,  to require that such payments of Platform  Charge shall be
made to such other Sony entity as SCEE may designate from time to time.

         8. Marketing & Distribution

         Publisher shall, at no expense to SCEE,  diligently market,  distribute
and sell Licensed Products throughout (but only in) the Licensed Territory,  and
shall use all reasonable  efforts  consistent with its best business judgment to
stimulate demand therefor in the Licensed  Territory and to supply any resulting
demand. Publisher shall not market, distribute or sell Licensed Products outside
the Licensed Territory or to any person, firm,  corporation or entity having its
place of business,  or to any purchasing  agency  located,  outside the Licensed
Territory.  Publisher shall use all reasonable  efforts consistent with its best
business  judgment  to  protect  Licensed  Products  from  and  against  illegal
reproduction  and/or  copying by end users or by any other  persons or entities.
Such methods of protection may include, without limitation, markings or insignia
providing identification of authenticity and packaging seals as may be specified
in the Specifications.  SCEE shall be entitled, at SCEE's sole cost and expense,
to  manufacture  up to  200  (two  hundred)  additional  units  of  Manufactured
Materials  (or such  greater  number of  additional  units as shall be agreed by
Publisher,  such agreement not  unreasonably to be withheld or delayed) for each
PlayStation 2 format Software title (and to purchase from Publisher,  at a price
equal to the actual cost thereof to Publisher,  a corresponding  number of units
of Printed Materials for each such PlayStation 2 format Software title), for the
purposes of or in connection  with the marketing and promotion of PlayStation 2;
provided  however  that SCEE shall not  directly or  indirectly  resell any such
units of  Manufactured  Materials  (and, if  applicable,  of Printed  Materials)
within  the  Licensed  Territory  without  Publisher's  prior  written  consent.
Further,  SCEE shall be entitled to utilise Publisher's name and/or logo and the
audio-visual  content of and/or the Printed Materials for,  PlayStation 2 format
Software titles (not to exclude the likenesses of any  recognisable  talent) for
the purposes of or in connection with such marketing and promotion.

         9. Confidentiality

            9.1  All the  terms  and  provisions  of the  CNDA  shall  apply  to
Confidential  Information  of  Sony  and,  if  and  to  the  extent  applicable,
Confidential Information of Publisher.

            9.2 Where Confidential  Information of Publisher is not protected by
the CNDA,  SCEE shall hold the same in confidence  and shall take all reasonable
steps  necessary to preserve  such  confidentiality.  Except as may expressly be
authorised by Publisher, SCEE shall not at any time, directly or indirectly: (i)
disclose any  Confidential  Information  of Publisher to any person other than a
Sony  employee  who  needs to know or have  access to such  information  for the
purposes of this Agreement,  and only to the extent necessary for such purposes;
(ii)  except  for  the  purposes  of  this  Agreement,   duplicate  or  use  the
Confidential Information of Publisher for any other purpose whatsoever; or (iii)
remove any copyright notice,  trademark notice and/or other  proprietary  legend
set  forth  on or  contained  within  any of  the  Confidential  Information  of
Publisher.

            9.3 The  provisions  of  Clause  9.2  hereof  shall not apply to any
Confidential  Information of Publisher which: (i) has become part of information
in the public domain through no fault of SCEE;



                                      -13-
<PAGE>

                                                                    CONFIDENTIAL

(ii) was known to SCEE  prior to the  disclosure  thereof  by  Publisher;  (iii)
properly comes into the possession of SCEE from a third party which is not under
any obligation to maintain the  confidentiality  of such  information.  SCEE may
disclose  Confidential  Information  of  Publisher  pursuant  to a  judicial  or
governmental  order  provided  that SCEE promptly  advises  Publisher in writing
prior to any such  disclosure so that Publisher may seek other legal remedies to
maintain the confidentiality of such Confidential  Information of Publisher, and
SCEE shall comply with any applicable protective order or equivalent.




         10. Warranties

            10.1  SCEE  represents  and  warrants  solely  for  the  benefit  of
Publisher  that SCEE has the right,  power and authority to enter into, to grant
the  licensed  rights  herein  granted to  Publisher,  and fully to perform  its
obligations under, this Agreement.


            10.2 SCEE  warrants  that units of  PlayStation  2 Discs  comprising
Licensed Products manufactured by SCEE for Publisher pursuant to Clause 6 hereof
shall be free from defects in  materials  and  workmanship  under normal use and
service at time of delivery in accordance  with Clause 6.6. The sole  obligation
of SCEE under this warranty  shall be, for a period of 90 (ninety) days from the
date of  delivery  of such  discs in  accordance  with  Clause  6.6,  at  SCEE's
election,  either (i) to replace  such  defective  discs or (ii) to issue credit
for, or to refund to  Publisher  the  Platform  Charge of such  defective  discs
(excluding PlayStation 2 Disc mastering charge),  together with the actual costs
of associated  Printed  Materials,  and to reimburse  Publisher  its  reasonable
return shipping costs. Such warranty is the only warranty applicable to Licensed
Products  manufactured by SCEE for Publisher pursuant to Clause 6. This warranty
shall not apply to damage resulting from accident,  fair wear and tear,  willful
damage,  alteration,  negligence,  abnormal conditions of use, failure to follow
directions  for  use  (whether  given,  in  instruction   manuals  or  otherwise
howsoever) or misuse of Licensed  Products,  or to discs comprising less than 1%
(one percent) [or, if greater,  100 (one hundred) units] in the aggregate of the
total  number  of  Licensed  Products  manufactured  by SCEE for  Publisher  per
purchase order of any PlayStation 2 format  Software  title.  If, during such 90
(ninety) day period,  defects appear as aforesaid,  Publisher  shall notify SCEE
and, upon request by SCEE (but not otherwise), return such defective discs, with
a written  description  of the defect  claimed,  to such  location as SCEE shall
designate. SCEE shall not accept for replacement,  credit or refund as aforesaid
any Licensed  Products except factory  defective discs (i.e.  discs that are not
free from defects in materials  and  workmanship  under normal use and service).
All returns of defective  discs shall be subject to prior written  authorisation
by SCEE, not  unreasonably to be withheld.  If no defect exists or the defect is
not such as to be covered under the above  warranty,  Publisher  shall reimburse
SCEE for reasonable expenses incurred in processing and analysing the discs.


            10.3 Publisher represents,  warrants, covenants and agrees that: (i)
Publisher has the right, power and authority to enter into, and fully to perform
its  obligations  under,  this  Agreement;  (ii) the making of this Agreement by
Publisher  does not  violate  any  separate  agreement,  rights  or  obligations
existing between  Publisher and any other person,  firm,  corporation or entity,
and, throughout the Term, Publisher shall


                                      -14-
<PAGE>

                                                                    CONFIDENTIAL

not make any separate  agreement with any person or entity which is inconsistent
with any of the provisions  hereof;  (iii) both Licensed  Developer Software and
PlayStation  2 format  Software,  and any  name,  designation  or title  used in
conjunction  therewith,  shall  be free  from any  valid  third  party  claim of
infringement of any Third Party Intellectual  Property Rights;  (iv) there is no
litigation,  proceeding or claim pending or threatened  against Publisher or any
subsidiary or affiliate of Publisher  which may  materially  affect  Publisher's
rights in and to Licensed Developer Software, the names,  designations or titles
used in  conjunction  therewith,  the works and  performances  embodied  therein
and/or the copyrights pertaining thereto; (v) Publisher shall have made or shall
make any and all payments required to be made to any person,  firm,  corporation
or other entity, or to any body or group representing authors or participants in
the  production  of the works or  performances  embodied in  Licensed  Developer
Software and  PlayStation 2 format  Software,  or to publishers or other persons
having  legal or  contractual  rights of any kind to  participate  in any income
arising in  respect of the  exploitation  of such  works or  performances;  (vi)
neither  Publisher nor any  subsidiary or affiliate of Publisher  shall make any
representation  or give any  warranty  to any  person  or  entity  expressly  or
impliedly  on  Sony's  behalf,  or to the  effect  that  Licensed  Products  are
connected  in any way with Sony (other  than that  Licensed  Products  have been
developed,  marketed,  manufactured,  sold and/or distributed under licence from
Sony);  (vii)  PlayStation 2 format  Software  shall be distributed by Publisher
solely in the form of Licensed  Product;  (viii) each Licensed  Product shall be
marketed,  sold and  distributed in an ethical manner and in accordance with all
applicable laws and  regulations;  and (ix)  Publisher's  policies and practices
with respect to the marketing,  sale and/or  distribution  of Licensed  Products
shall in no manner reflect  adversely  upon the name,  reputation or goodwill of
Sony.

            10.4 Further, Publisher represents,  warrants,  covenants and agrees
that  neither  Publisher  nor any parent  company,  subsidiary  or  affiliate of
Publisher  shall  during the Term,  whether for itself or for the benefit of any
other person, firm, corporation or entity, whether by itself or by its officers,
employees or agents,  directly or  indirectly,  induce or seek to induce,  on an
individually  targeted  basis,  the  employment  of,  or the  engagement  of the
services of, any Relevant Employee. For these purposes "Relevant Employee" shall
mean and  include  any  employee of (i) SCEE,  (ii)  Psygnosis  Limited or (iii)
PlayStation.com (Europe) Limited (or any of their subsidiaries or branch offices
outside the United Kingdom), the services of which employee are (a) specifically
engaged in product  development (or directly related) functions or (b) otherwise
reasonably  deemed by  his/her  employer  to be of  material  importance  to the
protection  of its  legitimate  business  interests,  and  with  which  employee
Publisher (or any parent  company,  subsidiary or affiliate of Publisher)  shall
have had contact or dealings  during the Term.  The foregoing  provisions  shall
continue to apply for a period of 12 (twelve) months following expiry or earlier
termination of the Term and are hereby deemed  substituted for any corresponding
provisions  in any  agreement(s)  previously  entered  into  between the parties
hereto in relation to PlayStation 2 and/or to Sony's  "PlayStation"  predecessor
video  entertainment  system.

         11. Indemnities

            11.1 SCEE  shall  indemnify  and hold  Publisher  harmless  from and
against any and all claims, losses,  liabilities,  damages,  expenses and costs,
including without limitation  reasonable fees for lawyers,  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 warranties  provided by SCEE herein or any breach of SCEE's  confidentiality
obligations as set forth in Clause 9.2 hereof;  provided  however that Publisher
shall give prompt written notice to SCEE of the assertion of any such claim, and
provided  further  that SCEE shall have the right to select  counsel and control
the defense  and/or  settlement  thereof,  subject to the right of  Publisher to
participate  in any such action or proceeding at its own expense with counsel of
its own choosing.  SCEE 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


                                      -15-
<PAGE>

                                                                    CONFIDENTIAL

deemed  appropriate  by SCEE.  Publisher  shall  provide  SCEE, at no expense to
Publisher,  reasonable  assistance and  cooperation  concerning any such matter.
Publisher  shall not agree to the  compromise,  settlement or abandonment of any
such claim, action or proceeding without SCEE's prior written consent.

            11.2  Publisher  shall  indemnify  and hold SCEE  harmless  from and
against any and all claims, losses,  liabilities,  damages,  expenses and costs,
including without limitation  reasonable fees for lawyers,  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  warranties  provided by  Publisher  herein or any breach of  Publisher's
confidentiality  obligations  as referred  to in Clause 9.1 hereof,  or (ii) any
claim of  infringement or alleged  infringement of any Third Party  Intellectual
Property Rights with respect to Licensed Developer Software (excluding any claim
relating to Sony Intellectual  Property Rights or the Licensed Trademarks or any
software, in object code or source code form, which has been provided by SCEE to
Publisher  in  furtherance  of this  Agreement),  or  (iii)  any  claim of or in
connection with any injury  (including  death) or property damage, by whomsoever
such claim is made,  arising (in whole or in part) out of the manufacture,  sale
and/or use of any of the Manufactured Materials unless resulting from the proven
negligence of Sony;  its  affiliates or  designees;  provided  however that SCEE
shall give prompt  written  notice to  Publisher  of the  assertion  of any such
claim,  and  provided  further  that  Publisher  shall  have the right to select
counsel and control the defence and/or settlement thereof,  subject to the right
of SCEE to  participate in any such action or proceeding at its own expense with
counsel of its own choosing.  Publisher  shall have the exclusive  right, at its
discretion,  to commence  and/or  prosecute at its own expense any lawsuit or to
take  such  other  action  with  respect  to such  matter  as  shall  be  deemed
appropriate by Publisher.  SCEE shall provide Publisher,  at no expense to SCEE,
reasonable assistance and cooperation concerning any such matter. SCEE shall not
agree to the compromise,  settlement or abandonment of any such claim, action or
proceeding without Publisher's prior written consent.

         12. Limitations of Liability

            12.1  IN NO  EVENT  SHALL  SONY  OR  ITS  SUPPLIERS  BE  LIABLE  FOR
PROSPECTIVE PROFITS, OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT (INCLUDING WITHOUT LIMITATION THE BREACH
OF THIS AGREEMENT BY SCEE),  WHETHER UNDER THEORY OF CONTRACT,  TORT  (INCLUDING
NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR OTHERWISE. IN NO EVENT SHALL SONY'S
LIABILITY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT,  INCLUDING WITHOUT
LIMITATION ANY LIABILITY FOR DIRECT DAMAGES,  AND INCLUDING  WITHOUT  LIMITATION
ANY LIABILITY UNDER CLAUSE 11.1, EXCEED THE PLATFORM CHARGE PAID BY PUBLISHER TO
SCEE  UNDER  CLAUSE 7 WITHIN  THE 2 (TWO)  YEARS  PRIOR TO THE DATE OF THE FIRST
OCCURENCE OF THE EVENT OR CIRCUMSTANCES GIVING RISE TO SUCH LIABILITY. EXCEPT AS
EXPRESSLY  SET  FORTH  HEREIN,  NO  SONY  ENTITY,  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 FUNCTIONALITY AND/OR PERFORMANCE OF LICENSED PRODUCTS.

            12.2 IN NO EVENT SHALL  PUBLISHER BE LIABLE TO SCEE FOR  PROSPECTIVE
PROFITS,  OR SPECIAL,  INCIDENTAL OR CONSEQUENTIAL  DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT  (INCLUDING WITHOUT LIMITATION THE BREACH OF THIS
AGREEMENT BY  PUBLISHER),  WHETHER  UNDER THEORY OF  CONTRACT,  TORT  (INCLUDING
NEGLIGENCE),  INDEMNITY, PRODUCT LIABILITY OR OTHERWISE, PROVIDED


                                      -16-
<PAGE>

                                                                    CONFIDENTIAL

THAT PUBLISHER EXPRESSLY AGREES THAT SUCH LIMITATIONS SHALL NOT APPLY TO DAMAGES
RESULTING  FROM  PUBLISHER'S  BREACH  OF  CLAUSES  2,  3,  4, 9 OR  11.2 OF THIS
AGREEMENT.

            12.3 SUBJECT AS EXPRESSLY PROVIDED IN CLAUSES 10.1 AND 10.2, NO SONY
ENTITY NOR ITS  SUPPLIERS  MAKE,  NOR DOES  PUBLISHER  RECEIVE,  ANY  WARRANTIES
(EXPRESS,  IMPLIED OR STATUTORY)  REGARDING THE SONY  MATERIALS  AND/OR UNITS OF
MANUFACTURED MATERIALS MANUFACTURED HEREUNDER.  SONY SHALL NOT BE LIABLE FOR ANY
INJURY, LOSS OR DAMAGE,  DIRECT OR CONSEQUENTIAL,  ARISING OUT OF THE USE OF, OR
INABILITY TO USE, SUCH UNITS OF  MANUFACTURED  MATERIALS.  WITHOUT  LIMITING THE
GENERALITY OF THE FOREGOING,  ANY WARRANTIES,  CONDITIONS OR OTHER TERMS IMPLIED
BY STATUTE OR COMMON LAW (INCLUDING AS TO MERCHANTABILITY,  SATISFACTORY QUALITY
AND/OR FITNESS FOR A PARTICULAR  PURPOSE AND THE  EQUIVALENTS  THEREOF UNDER THE
LAWS OF ANY  JURISDICTION)  ARE EXCLUDED TO THE FULLEST EXTENT PERMITTED BY LAW.
HOWEVER,  NOTHING IN THIS AGREEMENT SHALL LIMIT SONY'S  LIABILITY IN RELATION TO
CLAIMS ARISING FROM THE INJURY OR DEATH OF ANY PERSON  RESULTING FROM THE PROVEN
NEGLIGENCE OF SONY.

         13. Termination by SCEE

            13.1 SCEE shall have the right forthwith to terminate this Agreement
by written  notice to Publisher at any time after the  occurrence  of any of the
following  events or  circumstances:  (i) any  material  breach  of  Publisher's
obligations  under this Agreement  (or, if Publisher  shall also have executed a
PlayStation  Non-Disclosure  Agreement and/or  PlayStation 2  Confidentiality  &
Non-Disclosure  Agreement  which  shall have been  breached by  Publisher,  or a
PlayStation  Licensed  Developer   Agreement,   PlayStation  Licensed  Publisher
Agreement, PlayStation 2 Tools & Materials Loan Agreement and/or a PlayStation 2
Licensed  Developer  Agreement,  or a  PlayStation  or  PlayStation  2  licensed
developer,  development system or licensed  publisher  agreement (or equivalent)
with an Affiliate of SCEE,  which shall have been  terminated for breach by SCEE
or by such  party)  which  breach,  if capable  of  remedy,  shall not have been
corrected or cured in full within 30 (thirty)  days  following  notice from SCEE
(or the  applicable  Affiliate  of  SCEE as the  case  may  be)  specifying  and
requiring the  correction or cure of such breach,  or any  repetition of a prior
material breach of any such obligation,  whether or not capable of remedy;  (ii)
any  refusal or failure  by  Publisher  to effect  payment of  Platform  Charge,
promptly in  accordance  with Clauses 7.1 or 7.3 or at all, or a statement  that
Publisher  is or will be unable to pay, any sum(s) due  hereunder,  or Publisher
being unable to pay its debts generally as the same fall due; (iii)  Publisher's
filing of an application  for, or consenting to or directing the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator (or
the equivalent of any of the foregoing  under the laws of any  jurisdiction)  of
any of  Publisher's  property  (whether  tangible  or  intangible  and  wherever
located),  assets and/or undertaking;  (iv) the making by Publisher of a general
assignment for the benefit of creditors; (v) an adjudication in any jurisdiction
that Publisher is a bankrupt or insolvent;  (vi) the commencing by Publisher of,
or  Publisher's  intention  to  commence,  a  voluntary  case  under  applicable
bankruptcy  laws of any  jurisdiction;  (vii)  the  filing by  Publisher  of, or
Publisher's intention to file, a petition seeking to take advantage of any other
law(s)  of  any  jurisdiction  providing  for  the  relief  of  debtors;  (viii)
Publisher's  acquiescence  in,  intention  to  acquiesce  in, or failure to have
dismissed  within  90  (ninety)  days,  any  petition  filed  against  it in any
involuntary  case  brought  pursuant to the  bankruptcy  or other  law(s) of any
jurisdiction referred to in (vi) and (vii) above; (ix) a controlling partnership
or equity interest [or any such interest (other than an acquisition of less than
an aggregate of 5% (five  percent) of the issued share capital of Publisher,  as
quoted on a recognised investments  exchange),  in the case of a transfer to any
party which (a) shall  previously  have  executed a  PlayStation  Non-Disclosure
Agreement and/or PlayStation 2


                                      -17-
<PAGE>

                                                                    CONFIDENTIAL

Confidentiality  &  Non-Disclosure  Agreement  which shall have been breached by
such party, or a PlayStation Licensed Developer Agreement,  PlayStation Licensed
Publisher Agreement, PlayStation 2 Tools & Materials Loan Agreement, PlayStation
2  Licensed  Developer  Agreement  and/or a  PlayStation  2  Licensed  Publisher
Agreement  which shall have been terminated for breach by SCEE, or a PlayStation
or PlayStation 2 licensed  developer,  development  system or licensed publisher
agreement  (or  equivalent)  with an  Affiliate  of SCEE,  which shall have been
terminated for breach by such party,  or (b) is, or which directly or indirectly
holds or acquires a  partnership  or equity  interest  in, the  developer of (or
other owner of intellectual  property rights in) any interactive hardware device
or  product  which  is or  will  be  directly  or  indirectly  competitive  with
PlayStation  2, or (c) is in litigation  with Sony  concerning  any  proprietary
technology,  trade secrets and/or  intellectual  property  matter(s)  and/or has
challenged the validity of any Sony  Intellectual  Property Rights] in Publisher
or in all or  substantially  all of Publisher's  property  (whether  tangible or
intangible),  assets and/or undertaking, being acquired, directly or indirectly,
by any person, firm,  corporation or other entity; (x) Publisher enters into any
third party business  relationship  pursuant to which Publisher makes a material
contribution  to the  development  of the  core  components  of any  interactive
hardware  device  or  product  which  is  or  will  be  directly  or  indirectly
competitive with PlayStation 2, or if Publisher  directly or indirectly holds or
acquires a partnership or equity  interest  (other than a holding or acquisition
of less than an aggregate of 5% (five percent) of the issued share  capital,  as
quoted on a recognised  investments exchange) in, or otherwise forms a strategic
commercial  relationship with, any third party firm, corporation or other entity
which has  developed  or during the Term  develops  (or which owns or during the
Term acquires  ownership of intellectual  property rights in) any such device or
product;  (xi)  Publisher  failing  to  submit  materials  relating  to any  new
PlayStation 2 format  Software in accordance  with Clause 5.2, and/or failing to
issue any purchase orders for  Manufactured  Materials in accordance with Clause
6.5,  during any period of 12 (twelve)  consecutive  calendar  months;  or (xii)
Publisher (or any parent company, subsidiary or affiliate of Publisher) being in
litigation with Sony concerning any proprietary technology, trade secrets and/or
intellectual  property  matter(s)  and/or  challenging  the validity of any Sony
Intellectual  Property  Rights.  As  used  in  this  Clause  13.1,  "controlling
interest" means (i) in relation to a body corporate,  the power of the holder of
such  interest  to  secure  - (a) by  means  of the  holding  of  shares  or the
possession  of voting  power  in,  or in  relation  to,  that or any other  body
corporate  or  (b) by  virtue  of  any  powers  conferred  by  the  Articles  of
Association or other document regulating that or any other body corporate - that
the affairs of such body corporate be conducted in accordance with the wishes of
the holder of such interest, and (ii) in relation to a partnership, the right to
a share of more than 50% (fifty  percent)  of the assets or of the income of the
partnership.  Forthwith upon such occurrence, Publisher shall notify SCEE of the
occurrence of any of the events or circumstances specified in (ii) to (x) above;
and  Publisher's  failure so to do shall be a material  breach of this Agreement
not capable of remedy.

            13.2  Further,  SCEE  shall  have the  right by  written  notice  to
Publisher  forthwith to terminate the licences and related rights herein granted
to Publisher in relation to any  PlayStation 2 format Software at any time after
the occurrence of any of the following  events:  (i) any failure by Publisher to
submit to SCEE the materials  required to be submitted under Clauses 5.2 and 5.3
(or, if  applicable,  under Clause 5.6) in the form and manner and in conformity
with the standards and  specifications  therein  prescribed  which  failure,  if
capable  of remedy,  shall not have been  corrected  or cured in full  within 30
(thirty) days following notice from SCEE specifying and requiring the correction
or cure of such  breach;  and (ii) any failure by  Publisher  promptly to notify
SCEE in writing of any material change to any of the materials  approved by SCEE
pursuant to Clause 5.4 (or, if  applicable,  pursuant to Clause  5.6);  provided
however that SCEE shall not be entitled to exercise such right of termination if
Publisher's  failure  under (i) above is  directly  caused by SCEE's  failure to
comply with any of its material obligations expressly set forth herein.


                                      -18-
<PAGE>

                                                                    CONFIDENTIAL

         14. Effect of Expiration or Termination

            14.1  Notwithstanding the expiration of the Term, Publisher shall be
entitled to continue to publish PlayStation 2 format Software the development of
which shall have been approved prior to or during the Term hereof by SCEE (or by
an Affiliate of SCEE) pursuant to the  applicable  LDA2, and to use the Licensed
Trademarks  strictly,  only and directly in  connection  with such  publication,
until the expiration of the Term or, if later,  until the second  anniversary of
the 31 March next following such  approval.  Upon  expiration of the Term or, if
applicable,  such extended period for publishing  PlayStation 2 format Software,
Publisher  may sell off existing  inventories  of the  applicable  PlayStation 2
format  Software  titles,  on a  non-exclusive  basis,  for a period of 180 (one
hundred and eighty) days from the applicable  expiration  date;  provided always
that  such  inventory  thereof  shall  not  have  been  manufactured  solely  or
principally for sale within such sell-off period.

            14.2  However,   upon  the  exercising  by  SCEE  of  its  right  of
termination,  either of this  Agreement  pursuant to Clause 13.1(i) to (viii) or
Clause 13.1(xii) or in relation to any PlayStation 2 format Software pursuant to
Clause 13.2, all rights,  licences and privileges  licensed or otherwise granted
to Publisher  hereunder,  either  generally or in relation to such PlayStation 2
format Software (as applicable),  shall forthwith and without further  formality
revert  absolutely to SCEE and Publisher  shall  forthwith cease and desist from
any further use of the Sony  Materials,  any Sony  Intellectual  Property Rights
related thereto and the Licensed Trademarks,  and, subject to Clause 14.3, shall
have no further right to continue the marketing, sale and/or distribution of any
units of Licenced  Product or of any units of Licensed Product derived from such
PlayStation 2 format Software (as applicable).

            14.3  In the  event  of  termination  by  SCEE  pursuant  to  Clause
13.1(ix),  (x) or (xi) or by Publisher pursuant to Clause 25, Publisher may sell
off then unsold units of Licensed  Product(s),  for a period of 90 (ninety) days
from the effective  date of  termination;  provided  always that such  inventory
thereof shall not have been  manufactured  solely or principally for sale within
such  sell-off  period.  Subsequent  to the expiry of such 180 (one  hundred and
eighty) day or 90 (ninety) day sell-off  period,  or in the event of termination
by SCEE pursuant to Clause 13.1(i) to (viii),  Clause  13.1(xii) or Clause 13.2,
any and all units of Licensed  Products or the applicable  Licensed Products (as
the case may be),  remaining in Publisher's  inventory  and/or under its control
shall be destroyed  by Publisher  within 5 (five)  working days  following  such
expiry or effective date of termination.  Within 5 (five) working days following
such destruction,  Publisher shall furnish SCEE an itemised statement, certified
accurate  by a duly  authorised  officer,  partner or other  representative  (as
applicable) of Publisher, specifying the number of then unsold units of Licensed
Product(s) to which such termination applies, on a PlayStation 2 format Software
title-by-title  basis, which remain in its inventory and/or under its control at
such date,  confirming the number of units of Licensed Products destroyed,  on a
PlayStation 2 format Software  title-by-title basis, and indicating the location
and  date of  such  destruction  and  the  disposition  of the  remains  of such
destroyed materials.  SCEE shall be entitled to conduct a physical inspection of
Publisher's  inventory  during  normal  business  hours in order to ascertain or
verify such inventory and/or statement.

            14.4 Upon  termination  of the Term by SCEE pursuant to Clause 13.1,
Publisher  shall  forthwith  deliver up to SCEE (or, if so  requested by SCEE in
writing,  destroy and promptly  furnish SCEE a certificate  of such  destruction
signed  by a duly  authorised  officer,  partner  or  other  representative  (as
applicable) of Publisher) all Sony Materials,  and any Confidential  Information
of Sony of which Publisher shall have become apprised and which has been reduced
to  tangible  or  written  form,  and  any and all  copies  thereof  then in the
possession,  custody  or  control  of  Publisher.


                                      -19-
<PAGE>

                                                                    CONFIDENTIAL

            14.5  SCEE  shall be under no  obligation  to renew or  extend  this
Agreement  notwithstanding  any actions  taken by either of the parties prior to
its expiration or earlier  termination.  In the event of termination pursuant to
Clauses 13.1 or 13.2, no part of any payment(s)  whatsoever  theretofore made to
SCEE  hereunder (or, if Publisher  shall also have executed a LDA2,  thereunder)
shall be owed or repayable to Publisher, and nor shall either party be liable to
the other for any damages  (whether  direct,  consequential  or incidental,  and
including without  limitation any  expenditures,  loss of profits or prospective
profits)  sustained  or arising out of, or alleged to have been  sustained or to
have  arisen out of,  such  expiration  or  earlier  termination.  However,  the
expiration  or earlier  termination  of this  Agreement  shall not excuse either
party from any prior breach of any of the terms and provisions of this Agreement
or from any obligations  surviving such expiration or earlier  termination,  and
full legal and  equitable  remedies  shall  remain  available  for any breach or
threatened breach of this Agreement or of any obligations arising therefrom.

            14.6  The  expiration  or  earlier  termination  of  this  Agreement
(whether by SCEE pursuant to Clause 13 or otherwise  howsoever) shall be without
prejudice  to any and all rights and  remedies  which  either  party may then or
subsequently  have against the other party.

         15. Notices

            15.1 All notices under this Agreement  shall be in writing and shall
be given by courier or other personal delivery, by registered or certified mail,
by recognised  international courier service or by facsimile  transmission (with
an immediate  confirmation  copy by regular mail or any of the methods specified
above) at the  appropriate  address  hereinbefore  specified  or at a substitute
address  designated by notice by the party concerned (and in the case of notices
to SCEE shall be directed to its Vice President,  Business Affairs or such other
Sony representative as shall from time to time be designated by notice by SCEE).
Notices  given other than by  facsimile  transmission  shall be deemed given and
effective  when  delivered.  Notices  given by facsimile  transmission  shall be
deemed given only upon receipt of confirmation  copy as aforesaid but, upon such
receipt, shall be deemed effective as of the date of transmission.

            15.2  Whenever  Publisher  is required to obtain the  authorisation,
consent or approval of SCEE,  Publisher shall request the same by notice to SCEE
as  aforesaid,  and with a copy under  separate  cover to its  Director of Third
Party Relations or such other Sony  representative as shall from time to time be
designated by notice to Publisher. Such authorisation, consent or approval shall
not be deemed to be  granted  unless  and until  SCEE shall have given a written
affirmative  response to each request  therefor and shall in no event be implied
or inferred from any delay or failure of SCEE to give such or any response.

         16. Force Majeure

         Neither SCEE 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 breach of, its  obligations  under this  Agreement  results from any
events  or  circumstances  beyond  its  reasonable  control,  including  without
limitation any natural disaster,  fire,  flood,  earthquake or other act of God,
inevitable  accidents,  lockout,  strike or other labour dispute,  riot or civil
commotion, act of public enemy, enactment,  rule, order or act of any government
or governmental authority,  failure of technical facilities, or failure or delay
of transportation facilities.

17.      Relationship of the Parties

         The relationship  hereunder between SCEE and Publisher  respectively is
that of licensor and licensee.  Publisher is an independent contractor and shall
not in any  respect act as or be deemed to be the legal


                                      -20-
<PAGE>

                                                                    CONFIDENTIAL

representative,  agent,  joint  venturer,  partner or  employee  of SCEE for any
purpose whatsoever. Neither party shall have any right or authority to assume or
create any  obligations  of any kind or to make any  representation  or warranty
(express  or implied) on behalf of the other party or to bind the other party in
any respect whatsoever.

         18. Assignability

         SCEE  has  entered  into  this   Agreement   based  on  the  particular
reputation,  capabilities  and  experience  of  Publisher  and of its  officers,
directors  and  employees.  Accordingly,  Publisher  may not  assign,  pledge or
otherwise  dispose  of this  Agreement  or of 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 SCEE shall first have been obtained in
each case. Any attempted or purported  assignment,  pledge,  delegation or other
disposition  in  contravention  of this  Clause  18 shall be null and void and a
material breach of this Agreement not capable of remedy. SCEE shall be entitled,
without the consent of Publisher, to assign its rights and obligations hereunder
to any  corporation or other entity in which Sony  Corporation (or any successor
in  interest  thereto)  holds  a  controlling  interest,   whether  directly  or
indirectly.  Subject to the foregoing, this Agreement shall enure to the benefit
of the parties and their respective successors and permitted assigns.

         A person who is not party to this  Agreement  shall have no right under
the  Contracts  (Rights of Third  Parties)  Act 1999 to enforce any term of this
Agreement.  This  provision  does not  affect  any right or remedy of any person
which exists or is available otherwise than pursuant to such Act.

         19. Compliance and Applicable Laws

         The parties shall at all times comply with all  applicable  regulations
and orders of their  respective  countries and all  conventions  and treaties to
which their  countries  are 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,  licence or permit
required for the  performance of its obligations  hereunder,  and shall declare,
record or take such steps as may be necessary to render this Agreement  binding,
including  without  limitation  any required  filing of this  Agreement with any
appropriate governmental authorities.

         20. Governing Law

         This  Agreement  shall be governed by,  construed  and  interpreted  in
accordance  with  English  Law,  without  giving  effect to the conflict of laws
principles  thereof.  The parties irrevocably agree for the exclusive benefit of
SCEE  that  the  English  Courts  shall  have  jurisdiction  to  adjudicate  any
proceeding,  suit or action arising out of or in connection with this Agreement.
However,  nothing  contained  in this Clause 20 shall limit the right of SCEE to
take any such proceeding, suit or action against Publisher in any other court of
competent  jurisdiction,  nor shall the taking of any such  proceeding,  suit or
action in one or more  jurisdictions  preclude  the  taking  of any  other  such
proceeding,  suit or action in any other jurisdiction,  whether  concurrently or
not, to the extent  permitted by the law of such other  jurisdiction.  Publisher
shall have the right to take any such  proceeding,  suit or action  against SCEE
only in the English Courts.

         21. Remedies

         Publisher  acknowledges and agrees that any breach by Publisher of this
Agreement may cause Sony irreparable harm and damage which may not be capable of
remedy by damages alone and therefore that in the

                                      -21-
<PAGE>

                                                                    CONFIDENTIAL

event of any such breach SCEE may seek equitable  (including  injunctive) relief
against  Publisher in addition to damages  and/or any other remedy  available to
SCEE at law or in equity.  Either party's election to avail itself of any of the
remedies  provided  for in this  Agreement  shall not be  exclusive of any other
remedies  available  hereunder or  otherwise  at law or in equity,  and all such
remedies shall be  cumulative.  Publisher  shall  indemnify SCEE for all losses,
liabilities,   damages,   expenses  and  costs,   including  without  limitation
reasonable fees for lawyers,  expert witnesses and litigation costs,  which SCEE
may sustain or incur as a result of any breach or threatened breach by Publisher
of this Agreement.

         22. Severability

         In the event  that any  provision  of this  Agreement  (or any  part(s)
thereof),  other  than a  provision  in  respect of which SCEE gives a notice of
amendment  pursuant  to  Clause  25,  is  determined  by a  court  of  competent
jurisdiction  to be invalid  or  otherwise  unenforceable,  such  provision  (or
part(s)  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, but not in any way so as to affect the
validity or enforceability of any other provisions of this Agreement which shall
continue in full force and effect.

         23. Provisions Surviving Expiration or Termination

         The following  provisions of this Agreement  shall survive and continue
in full force and effect  notwithstanding  its expiration or earlier termination
(whether by SCEE pursuant to Clause 13 hereof or otherwise howsoever):

                Clause 3                   Sub-Publishers
                Clause 4                   Reservations
                Clause 5.7 + 5.8           Notices & Consumer Advisory Ratings
                Clause 6                   Manufacture of Licensed Products
                Clause 7                   Platform Charge
                Clause 9                   Confidentiality
                Clause 10.2 to 10.4        Warranties
                Clause 11                  Indemnities
                Clause 12                  Limitations of Liability
                Clause 14                  Effect of Expiration or Termination
                Clause 18                  Assignability
                Clause 20                  Governing Law
                Clause 21                  Remedies
                Clause 22                  Severability

         24. 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 it is sought to enforce
such waiver. 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 in relation to
any future event or circumstance.


                                      -22-
<PAGE>

                                                                    CONFIDENTIAL

         25. Amendments

         NOTHING IN THIS AGREEMENT  SHALL BE READ OR APPLIED IN SUCH A WAY AS TO
FRUSTRATE  ARTICLE 6 AND, IF AND TO THE EXTENT ANY  PROVISION OF THIS  AGREEMENT
(OR ANY PART  THEREOF) HAS (OR IS CAPABLE OF HAVING)  SUCH  EFFECT,  IT SHALL BE
DEEMED MODIFIED ACCORDINGLY.

         SCEE  RESERVES  THE  RIGHT,  AT ANY  TIME  UPON  REASONABLE  NOTICE  TO
PUBLISHER,  TO AMEND THE RELEVANT  PROVISIONS OF THIS  AGREEMENT,  THE SCHEDULES
HERETO AND/OR THE  SPECIFICATIONS  HEREIN  REFERRED TO, TO TAKE ACCOUNT OF OR IN
RESPONSE  TO ANY  DECISION  OR ORDER OF, OR  OBJECTION  RAISED  BY, ANY COURT OR
GOVERNMENTAL OR OTHER COMPETITION AUTHORITY OF COMPETENT JURISDICTION AND/OR ANY
STATUTORY OR SIMILAR  MEASURES  WHICH MIGHT BE IMPLEMENTED TO GIVE EFFECT TO ANY
SUCH DECISION,  WHICH APPLY TO THIS AGREEMENT,  THE SCHEDULES  HERETO AND/OR THE
SPECIFICATIONS HEREIN REFERRED TO (AND FROM WHICH THIS AGREEMENT,  THE SCHEDULES
HERETO  AND/OR  THE  SPECIFICATIONS  HEREIN  REFERRED  TO ARE NOT  EXEMPT) OR TO
REFLECT ANY  UNDERTAKING  GIVEN BY SONY TO ANY SUCH AUTHORITY IN RELATION TO ANY
AND ALL SUCH  MATTERS  AFORESAID.  ANY SUCH  AMENDMENT  SHALL BE OF  PROSPECTIVE
APPLICATION  ONLY AND SHALL NOT BE APPLIED  TO ANY  LICENSED  PRODUCT  MATERIALS
RELATING TO WHICH SHALL HAVE BEEN  SUBMITTED  TO SCEE BY  PUBLISHER  PURSUANT TO
CLAUSE 5.2 AND/OR 5.3 PRIOR TO THE DATE OF SCEE'S  NOTICE OF  AMENDMENT.  IN THE
EVENT THAT PUBLISHER IS UNWILLING TO ACCEPT ANY SUCH  AMENDMENT,  THEN PUBLISHER
SHALL HAVE THE RIGHT  FORTHWITH TO TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO
SCEE GIVEN NOT MORE THAN 90 (NINETY) DAYS FOLLOWING THE DATE OF SCEE'S NOTICE OF
AMENDMENT.  THE  PROVISIONS  OF CLAUSE 14.3 SHALL COME INTO EFFECT UPON ANY SUCH
TERMINATION BY PUBLISHER.

         Subject to the foregoing and except as otherwise provided herein,  this
Agreement shall not be subject to amendment,  change or modification  other than
by another written instrument duly executed by both of the parties hereto.

         26. Headlines

         The clause and other headings  contained in this Agreement are intended
primarily  for  reference  purposes  only and  shall  not  alone  determine  the
construction or interpretation of this Agreement or any provision(s) hereof.

         27. Integration

         This document  (including the Schedules hereto)  constitutes the entire
agreement  between the parties  with  respect to the  subject  matter  contained
herein,  and  supersedes  all prior or  contemporaneous  agreements,  proposals,
understandings  and communications  between Sony and Publisher,  whether oral or
written,  with respect to the subject matter hereof.  However, the generality of
the foregoing  notwithstanding,  the CNDA and, if applicable, the LDA 2 executed
by Publisher shall continue in full force and effect.



                                      -23-
<PAGE>

                                                                    CONFIDENTIAL

         28. Counterparts

         This Agreement may be executed in 2 (two)  counterparts,  each of which
shall be deemed an original, and both of which together shall constitute one and
the same instrument.

         IN WITNESS  WHEREOF the parties hereto have caused this Agreement to be
executed as of the date first above written.

SONY COMPUTER ENTERTAINMENT
EUROPE LIMITED                              3DO EUROPE LIMITED


/s/ Christopher Deering                     /s/ Stephen E. Fowler
-----------------------------------         ------------------------------------
Signature                                   Signature



Christopher Deering                         Stephen E. Fowler
-----------------------------------         ------------------------------------
Name                                        Signatory's Name (please print)


President                                   President
-----------------------------------         ------------------------------------
Title                                       Title


                                      -24-

<PAGE>

                                                                    CONFIDENTIAL

                                   SCHEDULE 1


     to the PlayStation 2 Licensed Publisher Agreement dated the 13th day of
            December 2000 between Sony Computer Entertainment Europe
                         Limited and 3DO Europe Limited

                         Licensed Territory (Clause 1.2)

(1)

Andorra                       Ireland                    Qatar
Armenia                       Israel                     Romania
Australia                     Italy                      Russian Federation
Austria                       Jordan                     San Marino
Azerbaijan                    Kazakhstan                 Saudi Arabia
Bahrain                       Kenya                      Serbia
Belarus                       Kuwait                     Slovakia
Belgium                       Latvia                     Slovenia
Bosnia Herzegovina            Lebanon                    Somalia
Botswana                      Liechtenstein              South Africa & Namibia
Bulgaria                      Lithuania                  Spain
Croatia                       Luxembourg                 Sweden
Cyprus                        Macedonia                  Swaziland
Czech Republic                Madagascar                 Switzerland
Denmark                       Malta                      Syria
Djibouti                      Mauritius                  Tanzania
Egypt                         Moldova                    Tunisia
Estonia                       Monaco                     Turkey
Ethiopia                      Morocco                    Turkmenistan
Finland                       Mozambique                 Ukraine
France                        Netherlands                United Arab Emirates
Georgia                       New Zealand                United Kingdom
Germany                       Nigeria                    Uzbekistan
Gibraltar                     Norway                     Vatican
Greece                        Oman                       Yemen
Hungary                       Poland                     Zambia
Iceland                       Portugal                   Zimbabwe

and all other  countries  which from time to time are  members  of the  European
Union or have otherwise  implemented  the Treaty on a European  Economic Area or
where  Articles 85 & 86 of the Treaty of Rome (or  provisions  similar  thereto)
have been implemented or are otherwise directly effective.

(2) Such countries in addition to those  specified in (1) above in which the PAL
television   standard  obtains  and  which  SCEE,  in  its  sole  discretion  as
representative of Sony Computer Entertainment worldwide, determines from time to
time to include  within the Licensed  Territory by notice to Publisher.  Without
limiting  the  generality  of the  foregoing,  SCEE  shall have the right not to
include  within the Licensed  Territory or,  having  included,  subsequently  to
exclude  from the  Licensed  Territory by  reasonable  notice to Publisher  (and
intends so to exclude) any such  country or  countries in which,  in SCEE's best
business  judgment,  the laws or  enforcement  of such laws do not protect  Sony
Intellectual Property Rights. By not later than the


<PAGE>


expiry of any such notice of exclusion, Publisher shall cease and desist, in the
country or countries concerned,  from any further use of the Sony Materials, any
Sony  Intellectual  Property Rights related thereto and the Licensed  Trademarks
and shall have no further  right to continue or authorise  the  marketing,  sale
and/or distribution of any units of PlayStation 2 format Software.

                                      -2-

<PAGE>

                                                                    CONFIDENTIAL

                                   SCHEDULE 2

      to the PlayStation 2 Licensed Publisher Agreement dated the 13th day
      of December 2000 between Sony Computer Entertainment Europe Limited
                             and 3DO Europe Limited

Platform Charge (Clause 7.1)

               Publisher's maximum price to
Band                      trade                         Platform Charge per unit

#1                        [ * ]                                    [ * ]

#2                        [ * ]                                    [ * ]

#3                        [ * ]                                    [ * ]

#4                        [ * ]                                    [ * ]

#5                        [ * ]                                    [ * ]

         For these purposes, "maximum price to trade" shall mean--
--------------------------------------------------------------------------------

         Publisher's (or, where applicable,  Publisher's  distributor's) highest
price net of trade margin to any trade  customer in the European  Economic  Area
and Australia for Publisher's (or, where applicable,  Publisher's distributor's)
minimum order quantity of the relevant  inventory,  net of year end (or similar)
volume rebates (if any) properly  attributable to sales of PlayStation software,
but prior to any  credit,  deduction  or rebate for co-op  advertising  or other
marketing support, returns or otherwise howsoever.

         Where Publisher's business (with the trade or through  distributors) is
conducted in local currencies other than ______, the local currency/__  exchange
rates to be applied for purposes of conforming to maximum price to trade for any
given  Band will be the  closing  mid-point  spot  rate as quoted in the  London
"Financial Times" on the first business day of each 6 month period, commencing 1
April  2000.  Such  exchange  rate will then reset for each  successive  6 month
period thereafter.

         The local currency maximum price to trade for any given title will then
be that derived by applying the exchange  rate  obtaining for the 6 month period
(as above) in which  Publisher  places its first  Purchase  Order ("PO") for the
title  concerned and will continue to apply for that title unless and until,  on
migration  (see below),  Publisher  places its first PO in a different Band in a
subsequent 6 month period.

         SCEE  reserves the right to review  local  currency  maximum  prices to
trade per Band  applicable  for any given 6 month period (as above) in the event
of a material exchange rate fluctuation, deemed for these purposes to be +/- 5%.

         The foregoing  assumes a standard  1-Disc  PlayStation 2 CD-ROM product
and covers mastering,  Disc, standard 2-colour Disc Label, PlayStation 2 box (or
other packaging) and automated assembly of all components, but excludes the cost
of Printed Materials other than Disc Label.

         For multi-disc PlayStation 2 CD-ROM products and PlayStation 2 products
in DVD5  format,  the  applicable  Platform  Charge  specified  above  shall  be
increased by [ * ] unit.


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


<PAGE>

                                                                    CONFIDENTIAL

         For the following optional  non-standard  Manufactured  Materials,  the
following  incremental charges (in addition to the otherwise applicable Platform
Charge specified above) will apply --

        o    Multi-Colour Disc Label

             3-colour                                        [ * ] per Disc

             4-colour                                        [ * ] per Disc

             5-colour                                        [ * ] per Disc

             6-colour                                        [ * ] per Disc

        o    White Base Underlay                             [ * ] per Disc

        o    Picture Disc                                    [ * ] per Disc

             if the Disc Label is more than 2-colour, for    [ * ] per Disc
             each additional colour (maximum 2 additional
             colours / [ * ] per Disc)

        o    Picture Disc - High Definition
                                                             [ * ] per Disc
        o    Shrink Wrap

                1/2-Disc CD-ROM products (in standard        [ * ] per Disc
                PlayStation 2 box)

                >2-Disc CD-ROM products                      as individually
                                                             quoted in each case

         The Platform Charge and minimum order and reorder  quantities for other
"non-standard"  Manufactured  Materials and/or production  processes shall be as
detailed  in the  Specifications  or,  where not so  detailed,  and  subject  to
availability, as individually quoted in each case.


                       ----------------------------------

                                      [ * ]

                       ----------------------------------

                                      [ * ]

                      ------------------------------------

                                      [ * ]

                      ------------------------------------

PlayStation 2 Hit Title Rebate program.

         Publisher's  software orders in each qualifying financial year (April -
March) will  determine  the level of Hit Title Rebate  ("HTR") in the  following
financial year. The first qualifying year runs 1 April 1999 - 31 March 2000.


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


                                       -2-
<PAGE>

                                                                    CONFIDENTIAL

         Titles with total bona fide orders  below [ * ] units will not be taken
into  account.  Otherwise,  all orders  for  software  for Sony's  "PlayStation"
predecessor  video  entertainment  system  (in one Band only per  title) and all
orders for PlayStation 2 format Software in each qualifying  financial year will
be  taken  into  account  in  calculating  the  Level  of HTR for the  following
financial year.

         Once  qualified for (as above),  HTR for each financial year will be at
one of the following levels--

         Level 1 ([ * ] units in qualifying  financial  year,  i.e.  immediately
                        preceding April - March),

         Level 2 ([ * ] units in qualifying financial year),

         Level 3 ([ * ] units in qualifying financial year).

         HTR will be redeemable in the applicable financial year, against orders
for PlayStation 2 format Software only as follows --

units per PlayStation 2
title *                         Level 1             Level 2           Level 3
-----------------------   -------------------   ---------------   --------------
                                            [ * ]




         * NB: per title,  not per SKU and not cume  across  all  PlayStation  2
titles

         The HTR for each  PlayStation  2 title shall  continue to escalate  (as
above)  for  orders in the same Band  notwithstanding  that such  orders  may be
placed in a following  financial year.  Subsequent orders for the same title but
in a  different  Band will be  counted  for these  purposes  as orders for a new
"title".

                                    * * * * *

         In order to verify conformity with the Band structure for PlayStation 2
format Software  described above, SCEE will require from time to time at its own
expense to inspect and audit the relevant of Publisher's financial records (and,
where applicable, those of Publisher's associated companies, subsidiaries and/or
branch offices in the Licensed  Territory).  Any such inspection and audit shall
take place  during  normal  business  hours at  Publisher's  principal  place of
business  (or  such  other  location  as the  relevant  books  and  records  are
maintained) upon reasonable prior notice and shall, at SCEE's sole election,  be
conducted  either by an independent  chartered or certified  accountant or by an
appropriately professionally qualified member of SCEE's staff.

         Initialled by                                Initialled by

           [      ]                                     [      ]

         Sony Computer Entertainment Europe       3DO Europe Limited


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


                                      -3-