Exhibit
10.18


 


January 1, 2004


 


Leslie Brown


THQ Inc.


27001 Agoura Road, Suite 325


Calabasas Hills, CA 91301


Fax: 818-871-7400


 


Re: Online
License on the PlayStation®2 Console


 


Dear Leslie :


 


This Letter Agreement amends the PlayStation®2
CD-ROM/DVD-ROM Licensed Publisher Agreement, effective as of April 1, 2000
(“PS2 LPA”) between Sony Computer Entertainment America Inc. (“SCEA”) and THQ
Inc. (“Company”).  This Letter Agreement
amends the PS2 LPA’s terms only to the extent of the terms and conditions set forth
in this Letter Agreement.  All other
terms and conditions of the PS2 LPA shall remain in full force and effect with
respect to Online Licensed Products (as defined below) and to other of Company’s
Licensed Products.  Capitalized terms
used herein and not defined shall have the meanings attributed to them in the
PS2 LPA.  SCEA’s decision to grant this
limited license of online rights to Company does not constitute, nor shall it
be construed as, a waiver of any other provision of the PS2 LPA, nor does it
constitute nor shall it be construed as a waiver of the PS2 LPA regarding any
further events or circumstances.


 


The parties hereto agree as follows:


 


1.               Definitions.


 


a.               “Network Adaptor” means the Network Adaptor
(Ethernet/modem) for PlayStation 2), which connects the System to the Internet
for Online Gameplay through a dial-up or high speed (broadband)
connection/Internet service provider, or connects Systems through a local area
network (“LAN”) environment.


 


b.              “Online Gameplay” means interaction integral to a game
or gameplay on a System that is connected to the Internet in some manner
(including but not limited to through usage of the Network Adaptor) and which
allows an end user to play other end users across the Internet or LAN
environment.  “Online Gameplay” shall
exclude all services, sales other then the sale of Online Gameplay Features to
Company end-users, advertisements and promotions or the ability to link to
same, made available to end users across the Internet or a LAN environment,
unless expressly approved by SCEA.


 


c.               “Online Gameplay Features” means downloadable
enhancements, additions, patches, and updates, including but not limited to,
characters, scripts, levels, modifications and otherwise provided to users
after sale of a Unit of that Individual Online Licensed Product.  “Online Gameplay Features” shall not be
playable independent of the corresponding Online Licensed Product.


 


d.              “Online Licensed Product” means a Licensed Product as
defined in the PS2 LPA that incorporates Online Gameplay Features and that is
designed to allow Online Gameplay.


 


e.               “System” means the PlayStation®2 computer
entertainment system.


 


CONFIDENTIAL


 


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2.               License Grant for Online
Licensed Products. SCEA
grants to Company, for the term of the PS2 LPA, within the Licensed Territory,
under SCEA Intellectual Property Rights owned, controlled or licensed by SCEA,
a non-exclusive, non-transferable license, without the right to sublicense
(except as specifically provided herein), to develop and publish Online
Licensed Products to end users.  The code
and data comprising Online Gameplay Features that Company makes available to
end users for any specific Online Licensed Product shall not exceed **** of the
code and data comprising the associated Licensed Product.  If Company desires to exceed the ****
limitation set forth in this section, Company and SCEA shall meet and discuss
on an ad hoc basis.


 


3.               Format of Online Licensed
Products. Online
Licensed Products shall be distributed to end users in the form of PlayStation®
2 Format Discs only.  Subsequent to sale
of the Online Licensed Product, associated Online Gameplay Features may be
distributed to end users pursuant to section 2 above governing terms in the
SourceBook 2.  SCEA reserves the right to
insert serial numbers on all PlayStation 2 Format Discs for security and
authentication purposes.


 


4.               Compatibility of Online
Licensed Products. All
Online Licensed Products will support and be compatible with the Network Adaptor.  Company shall be solely responsible for
functionality and operational compatibility of Online Licensed Products with
any such third party peripheral, and SCEA shall have no responsibility to test
or review any such third party peripherals. 
SCEA shall further not be held responsible for any actual, incidental or
consequential damages that may result from possession, use or malfunction of
such third party peripherals when used with Online Licensed Products or the
System.  If an Online Licensed Product supports
third party peripherals, SCEA may test or review some or all of such third
party peripherals its sole discretion, provided that (i) any such testing
or review by SCEA shall not obligate SCEA to test or review other or any
supported third party peripherals: (ii) any such testing or review by SCEA
shall not shift to SCEA any responsibility to ensure or assess third party
peripheral compatibility or require SCEA to report third party peripheral
incompatibilities; and (iii) if requested by SCEA, Company must provide to
SCEA a reasonable number of samples of any such third party peripheral products
for testing and review in a timely manner. 
In the event that any third party peripheral fails to perform to SCEA’s
satisfaction, SCEA shall have the right to require that Company remove
applications that support the third party peripheral.  Publisher shall not make Online Licensed
Products playable on platforms other than the System.


 


5.               Security and
Authentication of Online Licensed Products. Company shall utilize an authentication or
authorization system to be provided, licensed or identified by SCEA for all
Online Licensed Products to authenticate the veracity of PlayStation®2 hardware
and software, including but not limited to, Format Discs and Systems.


 


6.               Royalty on Online Licensed
Products. The
royalty for Online Licensed Products as provided in the PS2 LPA for Licensed
Products in addition to a **** royalty on gross online-generated revenues,
meaning **** given by end users in exchange for Online Gameplay or Online
Gameplay Features in conjunction with any Online Licensed Product.


 


7.               Royalties on Indirect
Revenues Related to Online Titles. In the
event that Company is permitted to charge a royalty, subscription fee or to be
paid any monetary consideration by third parties for activities related to
Online Gameplay of the Online Titles, including but not limited to






* Confidential portion
omitted and filed separately with the Securities and Exchange Commission.


 


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advertising
placements or sales, product sales, promotions, and tournaments, SCEA reserves
the right to charge royalties with respect to such activities.


 


8.               Quality Standards for the
Products. In
addition to complying with all quality assurance standards set forth in the LPA
and the SourceBook 2, Company shall comply with all quality assurance standards
and guidelines required by SCEA with respect to compatibility and Online
Gameplay Features of Online Licensed Products. 
Company shall also comply with any and all labeling requirements
required by SCEA with respect to Online Licensed Products.  Furthermore, any new versions of Online
Licensed Products and all Advertising Materials and Packaging relating to Online
Licensed Products shall be subject to SCEA’s prior written approval with
respect to all quality and compatibility features as set forth in the LPA, the
SourceBook 2 or as determined by SCEA and communicated to Company, prior to any
release to end users.  Notwithstanding
anything to the contrary in the SourceBook 2, the review process relating to
all aspects of Online Licensed Products may take longer than stated in the
SourceBook 2 for Licensed Products, and SCEA will bear no responsibility for
delays relating to such approvals.


 


9.               Legal Compliance. All Online Licensed Products must include a legal
disclosure enumerating end user and privacy policies prior to allowing any end
users to access Online Gameplay or Online Gameplay Features for the first time
for a particular user or as otherwise required by law.  Company will inform SCEA if personally
identifying information will be collected from end users of any Online Licensed
Product, how it will be collected, and shall provide to SCEA, for its review
and approval, a legitimate business reason for collecting such personally
identifying information and a copy of Company’s privacy policy.  Company shall adhere to all U.S. and
applicable foreign laws relating to online products, including but not limited
to the Children’s Online Privacy Protection Act (“COPPA”) rules and
regulations in the gathering, handling and dissemination of all user
registration data from end users of the Online Licensed Product.  Company will provide SCEA with a copy of its
user agreement for Online Licensed Products for SCEA’s review and
approval.  Such user agreement shall
either be hard coded into the Online Licensed Product or available on the
server hosting the Online Licensed Product in such a way that a user must agree
to it prior to accessing the Online Gameplay or Online Gameplay Features for
the first time, or as required by law. 
Such user agreement shall comply with the requirements for user
agreements set forth in the SourceBook2.


 


10.         Content and Vulgarity Filters. Each Online Licensed Product shall contain reasonable
content filters consistent with the rating of such Online Licensed Product,
which shall be subject to SCEA’s review and approval in its sole discretion.


 


11.         Beta Tests of Online Licensed Products. Company shall comply with SCEA guidelines relating to
beta testing of Online Licensed Products including but not limited to the terms
contained in Sections 9 and 10 herein. 
Company shall advise SCEA of any public beta testing program relating to
Online Licensed Products prior to commencement of any such public beta testing
program.  In addition, prior to
delivering an Online Licensed Product to beta testers, Company shall provide
SCEA with a copy of its beta testing agreement for SCEA’s review and
approval.  Such beta testing agreement
must be agreed to by beta testers prior to commencement of beta testing.  At SCEA’s sole discretion, SCEA may, require
Company to incorporate certain terms into Company’s beta testing agreement for
Online Licensed Products, which terms shall be incorporated into Company’s beta
testing agreement prior to delivery of Online Licensed Products to beta
testers.


 


12.         Cross Territory Capabilities. Company shall bear exclusively all responsibility and
liabilities for any features or capability of Online Licensed Products related
to cross-territory Online Gameplay.  


 


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Company shall indemnify
and hold SCEA harmless for any claims, demands, losses, liabilities, damages,
expenses and costs which result from or are in connection with any features or
capability of the Online Licensed Product related to cross-territory Online
Gameplay.  Any cross-territory features
or capabilities must comply with the SourceBook 2.


 


13.         Maintenance of Online Servers. Company shall maintain servers that support or host
Online Licensed Products for at least twelve (12) months past the last
commercial shipment from the Designated Manufacturing Facility of any Online
Licensed Product except that for Demo or other promotional Online Licensed
Products, Company shall maintain servers that support or host such Demo or
promotional Online Licensed Products for at least six (6) months past the
last shipment of such Online Licensed Products from the Designated
Manufacturing Facility.  Company must
also notify end users in a clear and conspicuous manner of any permanent shut
down to a server hosting or supporting an Online Licensed Product no later than
sixty (60) days prior to any shut down.


 


14.         Company Online Designee. Company shall appoint a dedicated contact person for
its Online Licensed Products, who shall act as a liaison between SCEA and
Company for all online matters relating to Company’s Online Licensed
Products.  Such designee shall also be
responsible for making sure that all terms and conditions relating to the
online elements of the Online Licensed Product are complied with and shall act
as the Company contact for matters related to the Online Licensed Product.  In the event that Company wishes to appoint a
new designee, it shall give SCEA written notice ten (10) days prior to the
change.


 


15.         Terminating Online Accounts. Company is responsible for policing its own Online
Licensed Products, including gameplay, chat, use of user names and other naming
devices, provided that Company shall not terminate any online account of an end
user by using the MAC ID, or serial number, or any Network Adaptor or System.


 


16.         No Reverse Engineering. In addition to the provisions of section 4.1 of the
PS2 LPA, Company shall not directly or indirectly disassemble, decrypt,
electronically scan, peel semiconductor components, decompile or otherwise
reverse engineer in any manner or attempt to reverse engineer the System or
Network Adaptor in order to determine machine identification or any online
component.  Company shall not use the
machine ID in any manner.


 


17.         Confidentiality. Except as may be required by law, neither party shall
disclose to any third party the terms of this Letter Agreement or any
confidential information of the other party (with the exception of the
provisions of this paragraph at any time during the term of this Agreement and
for two (2) years after, without the prior written consent of the other
party.  The terms of the PS2 LPA shall
apply to any such disclosure.


 


18.         LIMITATION OF LIABILITY. IN NO EVENT SHALL SCEA OR OTHER SCEA AFFILIATES AND
THEIR SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE FOR LOSS OF
PROFITS, OR ANY SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING
WITHOUT LIMITATION THE BREACH OF THIS AGREEMENT BY SCEA, THE MANUFACTURE OF
LICENSED OR ONLINE LICENSED PRODUCTS OR THE USE OF LICENSED PRODUCTS,
EXECUTABLE SOFTWARE, AUTHENTICATION SYSTEMS PROVIDED, LICENSED OR INDENTIFIED
BY SCEA AND/OR THE SYSTEM BY COMPANY OR ANY END-USER, WHETHER UNDER THEORY OF 


 


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CONTRACTS, TORT
(INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR OTHERWISE.  IN NO EVENT SHALL SCEA’S LIABILITY ARISING
UNDER, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ANY LIABILITY FOR DIRECT OR INDIRECT DAMAGES, EXCEED ****.  EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER
SCEA NOR ANY AFFILIATES OF SCEA, NOR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS SHALL BEAR ANY RISK OR HAVE ANY RESPONSIBILITY OR LIABILITY
OR ANY KIND TO COMPANY OR TO ANY THIRD PARTIES WITH RESPECT TO THE QUALITY,
OPERATION AND/OR PERFORMANCE OF ANY PORTION OF THE SONY MATERIALS, THE SYSTEM
OR ANY LICENSED PRODUCT. THIS SECTION SHALL SURVIVE ANY TERMINATION OF
THIS AGREEMENT.’


 


The parties hereto agree that the terms of this Letter
Agreement are binding.  This Letter
Agreement shall constitute the entire agreement and understanding of the
parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the
parties, except as otherwise indicated with respect to he PS2 LPA, both oral
and written.  No waiver or modification
of any provision of this Letter Agreement shall be effective unless in writing
and signed by both parties.  This Letter
Agreement may be executed in counterparts, each of which shall be deemed an
original, and any and all of which together shall constitute one and the same
instrument.  This Letter Agreement shall
be governed by and construed in accordance with the law of the State of
California.  The parties hereby consent
to and submit to the non-exclusive jurisdiction of federal and state courts located
in the State of California as set forth in the PS2 LPA.


 


If you are in agreement with the above terms and
conditions, please sign in the space provided below and return an original to
me to confirm that the foregoing accurately summarizes our agreement regarding
the license contained herein.


 


AGREED AND ACCEPTED:


 


	
  SONY COMPUTER ENTERTAINMENT

  	
   

  	
  THQ INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  AMERICA INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Andrew House

  	
   

  	
  By: 

  	
  /s/ James M. Kennedy

  
	
  Name: 

  	
  Andrew House

  	
   

  	
  Name:

  	
  James M. Kennedy

  
	
  Title: 

  	
  EVP

  	
   

  	
  Title: 

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  	
  Business and Legal Affairs

  
	
  Date: 

  	
  11/16/04

  	
   

  	
  Date: 

  	
  November 10,2004

  



 


NOT AN AGREEMENT UNTIL EXECUTED BY BOTH PARTIES


 






* Confidential portion
omitted and filed separately with the Securities and Exchange Commission.


 


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