Document:

Exhibit
10.2

 

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated by {*****}. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.

 

SOFTWARE LICENSE AGREEMENT

 

1.                          INTRODUCTION

1.1. This agreement (“Agreement”) is entered into as of the date the
last party signs it (“Effective Date”) between Inovaware Corporation
(“Vendor”), and VIA NET.WORKS, Inc. (“Customer”), with offices located at H. Walaart Sacrestraat 401-403, 1117 BM Schipol
(SCHIPOL OOST), The Netherlands, under which Inovaware Corporation is
licensing software on a non-exclusive basis for the Customer’s own use under the
terms and conditions stated below.

 

2.                          DEFINITIONS

As used in this Agreement, the following definitions
shall apply:

2.1.                              “Active
User” shall mean a customer record with 1 or more active services.

2.2.                              “Approved
Contractor” is a contractor or consultant that has agreed in writing to be
bound by the terms of this Agreement.

2.3.                             “Authorized
User” is an employee or Approved Contractor of Customer or of any Subsidiary
Organization.

2.4.                             A
“Bug” is defined as a reproducible error or defect in the Program that causes a
malfunction or behavior inconsistent with Documentation.

2.5.                             “Documentation”
shall mean the user manual(s) and any other materials supplied by Vendor for
use with the Program or with any Update.

2.6.                             “Monthly
License Fee” means the monthly fee payable by Customer for the right to use the
Program.

2.7.                             “Program”
shall mean the machine-readable object code of the computer software program or
programs described in the Program Description and Price Schedule attached as
Schedule A to the Agreement and such additional Updates of such programs that
shall be supplied by Vendor to Customer from time to time together with its
Documentation.

2.8.                             “Release”
shall mean any version of the Program or any materials that are supplied to
Customer by Vendor at or after the delivery of the Program, together with
related Documentation.

2.9.                             “Software
Support” is defined as any support that requires direct intervention on the
part of the Vendor to resolve problems that arise in and that are directly
related to the Program.

2.10.                       A “Software
Support Incident-Hour” is defined as an hour spent by Vendor working on a
Software Support issue.

2.11.                       A
“Subsidiary Organization” is defined as a wholly owned subsidiary of Customer
that has agreed in writing to be bound by the terms of this Agreement.

2.12.                       “Term” is
defined as the duration during which the Customer is authorized to use the
Program in accordance with this Agreement.

2.13.                       “Updates”
shall mean all standard updates, upgrades, revisions, and/or fixes provided to
Customer hereunder with respect to the Program.  Updates are generally designated as a “left of dot release” (e.g.
5.0, 6.0 are Updates). Updates do not include new modules added to the existing
Program, substantially different versions of the Program or new, separately
marketed Programs as defined by Vendor in its sole discretion.

 

3.                          TERM OF
LICENSE

3.1.                             Vendor
hereby grants to Customer, and Customer hereby accepts, a non-exclusive,
non-perpetual license to use a single copy of the Program for the Term of this
Agreement, which shall be for an initial Term of thirty-six (36) months from
Initial Acceptance (as defined in Section 6) up to the maximum number of Active
Users defined in Schedule A subject to the terms and provisions of this
Agreement unless sooner terminated. 
After the initial Term has lapsed, Customer and Vendor shall negotiate
for up to six months and in good faith upon new terms during which time the
terms and fees outlined in this Agreement shall still apply.  The license to use the Program shall
continue during this time and terminate thereafter unless a new term is
mutually agreed upon in writing prior to the lapse of such six-month period
subject to the terms and provisions of this Agreement unless sooner terminated.

3.2.                             Vendor
may terminate this Agreement without prior written notice at any time the
Customer is in default of this Agreement, such as, but not limited to failure
by Customer to make Monthly License Fee when due in accordance with Section
16.2 below.

 

4.                          SCOPE OF
THE AGREEMENT

4.1.                             This
Agreement shall apply to each Program or Update of a Program that Customer is
currently licensing from Vendor or shall license in the future.

4.2.                             Vendor
shall not restrict the number of Authorized Users who may use the Program,
though any person or entity that is not an Authorized User may not use the
Program.

4.3.                             The
Program may be used for Customer’s internal business use and only to process
information or data of Customer and Subsidiary Organizations.  Customer may not process information or data
belonging to other parties and may not rent, lease, sublicense, or loan the
Program.

 

5.                          COPIES
OF THE PROGRAM

5.1.                             Vendor
shall furnish to Customer one copy of the Program. Customer shall be entitled
to make additional copies of the Program and Documentation to the extent
necessary for use of the Program by Authorized Users provided that only one
copy of the database files associated with the Program are in use at any one
time and only one copy of the Program is in use at any one time for purposes
other than testing or backup.  Customer
may make multiple copies of the Program for backup or testing purposes.
Customer shall reproduce and include copyright or trade secret notices on any
copies in the same text and prominence as stated in the copies provided to
Customer and may not alter any proprietary markings on the Program, including
copyright, trademark, trade secret, and patent legends.

 

6.                          ACCEPTANCE

6.1.                             The
Program shall be deemed initially accepted ***** calendar days from the
Effective Date (“Initial Acceptance”). 
The date on

 

	
  Vendor Initials

  	
   

  	
   

  	
   

  	
  Customer Initials

  	
   

  
	
  Confidential Document

  	
   

  	
  License-Final-unprotected-Inovaware.doc

  

 

1

 

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated by {*****}. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.

 

which each successive country
uses the Program ***** shall be the incremental acceptance (“Incremental
Acceptance”).  The sooner of *****
calendar days from the Effective Date shall be the date of full acceptance
(“Acceptance”).  All fees collected,
accrued, or due, such as but not limited to Monthly License Fees, training,
setup fees, and support fees are nonrefundable upon Initial Acceptance of the
Program.  Customer shall not use Program
in a non-testing environment in any country without such country making
Incremental Acceptance.

 

7.                          PAYMENT
OF PROGRAM LICENSE FEE

7.1.                             In
consideration of the Term license granted under this Agreement, Customer shall
pay to Vendor the Monthly License Fees outlined in Schedule A.  Monthly License Fees are due monthly and in
advance for any given month.

7.2.                             Customer
shall be entitled to dispute all License Fee invoices and withhold any License
Fees due under this Agreement in the case where the Program is in violation of
the warranty as defined in Section 11 or where the Vendor has breached this Agreement
as set forth in Section 16.3.  Customer
shall notify Vendor of all such disputed amounts prior to their due date of
payment, at which time the parties shall use all reasonable efforts to resolve
the dispute within thirty (30) calendar days. 
If the dispute is not resolved within this period the Customer shall
deposit the disputed fees into an escrow account and the parties agree to refer
the disputed amount to an appropriate independent and neutral third party (the
“Independent Expert”), who shall be agreed by the parties for resolution of the
disputed amount. The parties agree to be bound by the decision and terms of the
Independent Expert.  Each party shall
bear its own costs and expenses in seeking the decision of the Independent
Expert.  Where an invoice is partly
disputed, nothing in the above clause shall release Customer from the proper
payment of the undisputed parts of that invoice in accordance with the
provisions of Section 7.

 

8.                          ACKNOWLEDGMENT
OF VENDOR’S OWNERSHIP RIGHTS

8.1.                             Customer
acknowledges that it obtains no ownership rights in the Program under the terms
of this Agreement. All rights in the Program including but not limited to
Confidential Information, trade secrets, trademarks, service marks, patents,
and copyrights are, shall be, and will remain the property of Vendor or any
third party from whom Vendor has licensed software or technology. All copies of
the Program delivered to Customer or made by Customer remain the property of
Vendor.

 

9.                          CONFIDENTIAL
INFORMATION

9.1.                             Customer
acknowledges that all material made available by Vendor to Customer may contain
proprietary and confidential information of Vendor. Customer agrees to keep the
Program, database structure, pricing, Documentation, the terms and conditions
of this Agreement, and all other Vendor-specific proprietary information and
all other information that is or should be reasonably understood to be
confidential or proprietary (the “Confidential Information”), in confidence and
to take all reasonable precautions to ensure that no unauthorized persons have
access to such information and that no unauthorized copies are made. Breach of
this provision shall be grounds for immediate termination of this Agreement
without further obligation to Customer, at Vendor’s option.

9.2.                             Customer
may not decompile, disassemble, or reverse engineer the Program.  Notwithstanding the foregoing, Vendor gives
it consent for Customer to integrate with or extend the Program through the use
of Vendor’s application program interfaces (“API”).

9.3.                             Customer
shall not challenge, or assist or encourage others to challenge, the validity
of Vendor’s rights in the Program, or Vendor’s or its supplier’s ownership
thereof.

9.4.                             Vendor
acknowledges that certain information may be made available by Customer to
Vendor containing proprietary and confidential information of Customer most
notably its pricing structures of certain products. Vendor agrees to keep such
information, the terms and conditions of this Agreement, and all
Customer-specific proprietary information and all other information that is or
should be reasonably understood to be confidential or proprietary (the
“Customer Confidential Information”), in confidence and to take all reasonable
precautions to ensure that no unauthorized persons have access to such
information and that no unauthorized copies are made.

 

10.                   CUSTOMER’S
OBLIGATION FOR DATA PROTECTION

10.1.                       Vendor
shall not be liable for any loss of Customer’s data and Customer shall
indemnify, defend, and hold harmless Vendor against any claim arising from any
loss of Customer’s data, including any loss or corruption from migrating or
converting data.

 

11.                   WARRANTY

11.1.                       After
Initial Acceptance or Incremental Acceptance, as the case may be, Vendor
warrants that when installed on a supported platform without any unrequired
application programs, the Program will perform substantially in accordance with
accompanying Documentation for a period of ***** from the applicable
Incremental Acceptance (“Warranty Period”). 
Vendor will use commercially reasonable efforts to provide a temporary
fix or work-around within ***** business days for any problem that is
identified as a Fatal Error as outlined in Schedule B that is the result of a
Bug.  As of the Effective Date, Vendor
warrants that there are no known allegations or claims of any kind that the
Program infringes on the intellectual property rights of any third party.

11.2.                       VENDOR
DISCLAIMS ALL OTHER WARRANTIES AND CONDITIONS, INCLUDING, BUT NOT LIMITED TO,
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
VENDOR DOES NOT WARRANT THAT THE PROGRAM IS FREE FROM BUGS, ERRORS, OR OTHER
LIMITATIONS.

11.3.                       VENDOR WILL
NOT BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
WHATSOEVER INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR LOSS OF BUSINESS PROFITS,
LOSS OF BUSINESS GOODWILL, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION,
OR LOSS OF OPPORTUNITIES UNDER ANY CIRCUMSTANCES.

11.4.                       CUSTOMER’S
EXCLUSIVE REMEDY AGAINST VENDOR OR ANY OTHER PARTY FOR A MATERIAL BREACH OF THE
WARRANTIES UNDER THIS AGREEMENT OR ANY OTHER CLAIM NOT OTHERWISE PROVIDED FOR
IN THIS AGREEMENT SHALL BE, AT VENDOR’S CHOICE, (A) SUBSTANTIAL CORRECTION OF
ANY MATERIAL BUG OR MATERIAL DEFECT IN THE PROGRAM AS TO WHICH CUSTOMER HAS
GIVEN WRITTEN NOTICE OR (B)

 

 

2

 

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated by {*****}. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.

 

REPLACEMENT OF THE
PROGRAM INVOLVED.  IF VENDOR’S RECEIPT
OF NOTICE FROM CUSTOMER OCCURS WITHIN THE WARRANTY PERIOD AND (A) OR (B) CANNOT
BE ACCOMPLISHED WITHIN 30 CALENDAR DAYS OF VENDOR’S RECEIPT OF NOTICE FROM
CUSTOMER, CUSTOMER MAY TERMINATE THIS AGREEMENT WITHOUT PENALTY. CUSTOMER’S
RIGHT TO TERMINATE FOR SUCH BREACH SHALL EXPIRE IF NOT EXERCISED WITHIN 30
CALENDAR DAYS FROM VENDOR’S RECEIPT OF NOTIFICATION FROM CUSTOMER.

11.5.                       If any
problem, operational failure or error of the Program has resulted from any
alteration of the Program, use on an unsupported platform, accident, abuse, or
misapplication, then this warranty shall be null and void, at Vendor’s option.

 

12.                   OVERALL
LIMITATION OF DAMAGES

12.1.                       IN NO CASE
SHALL THE AGGREGATE AMOUNT OF DAMAGES PAYABLE TO CUSTOMER FROM ANY AND ALL
PARTIES FOR ANY CLAIM ARISING FROM THE PROGRAM OR THIS AGREEMENT (INCLUDING,
WITHOUT LIMITATION, ITS WARRANTY PROVISIONS) EXCEED THE MONTHLY LICENSE FEES
PAID BY CUSTOMER TO VENDOR UNDER THIS AGREEMENT IN THE PRIOR TWENTY-FOUR
MONTHS.

 

13.                   INDEMNIFICATION

13.1.                       Vendor
agrees to indemnify, defend and hold Customer harmless against any loss,
damage, expense, or cost, including reasonable attorneys’ fees, arising out of
any claim, demand, or suit asserting that the Program infringes or violates any
copyright, patent, trade secret, trademark, or proprietary right existing under
the laws of a country that is a signatory to the Berne Convention thereof
(“Claim”).

13.2.                       The
indemnification obligation in this section shall be effective only if (a) at
the time of the alleged infringement, Customer was using a currently supported
version of the Program, (b) Customer gave notice of the Claim within fourteen
(14) calendar days from date Customer first becomes aware and permitted Vendor
to defend unless due to its failure to notify Vendor it has not been adversely
prejudiced, (c) this Agreement had not been terminated at the time of the
alleged infringement, and (e) Customer reasonably cooperate in the defense of
the claim. Vendor shall have no obligation to Customer to defend or satisfy any
claims made against Customer that arise from the use, sale, licensing or other
disposition of the Program by Customer other than as permitted by this
Agreement or from the Customer’s unauthorized modification of the Program.

13.3.                       If Vendor
supplies a non-infringing Update of the Program, Customer shall promptly
install it on its computer system, and terminate use of prior Releases of the
Program. If, in its judgment, Vendor deems that, due to a Claim or for any
other reason, it is not in Vendor’s practical interest to continue distributing
a Program, Vendor may require Customer to terminate use of a Program upon sixty
(60) calendar days written notice, unless a court orders a shorter period and
Customer shall have no further obligation to pay Monthly License Fees. In
addition, Vendor may, at any time, grant Customer a full refund of the Monthly
License Fees paid over the previous twenty-four (24) months in which case
Vendor shall have no further indemnification obligations under this Agreement
as to such Program.  THE FOREGOING IS
CUSTOMER’S EXCLUSIVE REMEDY IN SUCH CASE.

 

14.                   SOFTWARE SUPPORT

14.1.                       During the
first year beginning from the Effective Date, Customer shall be entitled to the
number and type of Software Support Incident-Hours described in Schedule A
according to the terms defined in Schedule B. Bugs are not charged against
Customers Software Support Incident-Hours. 
After all Software Support Incident-Hours have expired or been used, the
Customer may continue to receive support by purchasing additional support at
the then current support rates. Unless otherwise stated, all Software Support
will be performed during Vendor’s normal business hours and are valid for one
year from date of purchase.  All
fractions of an hour used for Software Support shall be rounded up to the next
highest twenty-minute increment.

14.2.                       Software
Support does not include (a) support for any third-party products, such as, but
not limited to, assistance with hardware, database software, collection
software and operating systems, (b) service such as database repairs,
configuration of the Program, third party hardware or software configuration
assistance, custom reports, training, etc., and (c) modifications and
customizations to the Program, such as the customization of existing reports,
creation of new reports, customizations of configuration files, and the addition
of any feature or functionality not currently supported in the Program.  Vendor will provide release notes and
updated documentation for all APIs.

14.3.                       Vendor’s
current policy is to support the most recently released version of the Program
and the next prior version, and to cease maintenance of earlier versions
provided, however, that Vendor shall not support any new release for less than
***** from date Program is first released. 
However, Vendor reserves the right to change this policy at its discretion
upon ***** prior written notice, but shall not change this policy unfavorably
to Customer more than one (1) time during the Term.

14.4.                       Customer
agrees that in order to receive Software Support for a Program, (a) Customer
must have valid Software Support Incident-Hours or be willing to pay thereof
from time to time at Vendor’s discretion, (b) Customer must use a currently
supported version of the Program installed with the required computer hardware
and software within six (6) months of its release by Vendor, and (c) Customer
must not have any payments owed to Vendor in arrear in accordance with this
Agreement. Customer acknowledges and agrees that it may be necessary to update
its computer hardware and/or software to achieve compatibility with the currently
supported version Customer acknowledges and agrees that if it has allowed its
subscription to Software Support to lapse, and if its version of the Program is
not currently supported, it may have to obtain a current version to obtain
Software Support, as is discussed below.

14.5.                       If Customer
is not using a currently supported version of the Program as defined in
Sections 14.3 and 14.4 with the required computer hardware and software, Vendor
may suspend provision of Software Support until Customer cures this condition
without refunding any Software Support Fees.

14.6.                       Customer
may terminate Software Support by written notice to Vendor prior to expiration
of Software Support. However, Vendor shall not be required to refund any
Software Support fee unless Vendor failed to provide Software Support where
Customer was unable to use the Program due to a Fatal Error (as defined in
Schedule B) for longer than 10 calendar days.

14.7.                       Any
installation required for an Update to a currently supported version of a Program
under any paragraph of this Agreement, when performed by Vendor, will be
charged to Customer at Vendor’s rate of $***** per hour as of the Effective
Date, where such rate will not increase by more

 

 

3

 

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated by {*****}. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.

 

than the greater of 5%
per year or the United States domestic inflation rate per year, plus
reimbursement for any reasonable out-of-pocket costs or expenses incurred by
Vendor. Such installation charges shall be in addition to other fees or charges
that may be due.  Customer agrees to pay
such fees.

14.8.                       Vendor will
undertake commercially reasonable efforts to provide Software Support under
this Agreement, but does not guarantee that any or all of the Customer’s
problems will be solved or that any item or response will be error free. Vendor
reserves the right to terminate support or service to any individual who abuses
any support program including, but not limited to sharing special phone numbers
and customer identification numbers with others.

14.9.                       Subject to
any of Customer’s security requirements, the Customer shall provide Vendor with
access to all needed equipment to include but not limited to computer hardware
and software as reasonably necessary to perform Software Support.  Customer’s failure to provide such access
shall relieve Vendor from any obligation to perform Software Support for the
components impacted by the restriction until condition is cured.

14.10.                 Vendor shall not
be responsible for or have an obligation to provide Software Support to
Customer for problems that arise from operational failure or errors in the
Program that result from any alteration of the Program not made by Vendor to
include any change made directly to the database, use on an unsupported
platform, accident, abuse, or misapplication. Vendor is not responsible for
errors or malfunctions caused by any hardware or any third party operating
system or third party program not developed, provided, and installed by Vendor.

 

15.                   SOFTWARE
MAINTENANCE FEE

15.1.                       During the
Term, Vendor shall provide Customer with software maintenance (“Software
Maintenance”) to the Program at no additional cost, which shall include
time-unrestricted access to support content provided via Vendor’s web pages,
Updates, and all standard corrections and Bug-fixes that become generally
available for the version of the Program licensed.

15.2.                       Software
Support must be purchased separately and is not considered part of Software
Maintenance.

 

16.                   TERMINATION

16.1.                       It is
agreed that either party may terminate this Agreement immediately upon ninety
(90) calendar days written notice to the other party in the event that such
other party has missed any payment required hereunder and (a) becomes insolvent
or makes an assignment for the benefit of creditors; (b) files or has filed
against it any petition under Title 11 of the United States Code or under any
applicable bankruptcy, insolvency, reorganization or similar debtor relief law
which is not discharged within ninety (90) calendar days of said filing, or (c)
requests or suffers the appointment of a trustee or receiver, or the entry of
an attachment or execution as to a substantial part of its business or assets
and same is not released or bonded off within ninety (90) calendar days.

16.2.                       Vendor may
terminate this Agreement in the event Customer (a) fails to make when due any
Monthly License Fee payment or other payment due Vendor which remains unpaid
after ten (10) business days from Vendor’s written notice to Customer of such
non-payment or; (b) Customer commits a material breach of any of its
obligations which remains uncured after thirty (30) calendar days from Vendor’s
written notice to Customer of such breach.

16.3.                       Notwithstanding
any other rights that Customer may have to terminate this Agreement, Customer
may terminate this Agreement in the event Vendor commits a material breach of
any of its obligations, which remains uncured after thirty (30) calendar days
from Customer’s written notice to Vendor of such breach.

 

17.                   RIGHTS UPON
TERMINATION

17.1.                       Upon
termination of this Agreement, Customer’s license to use the Program shall
terminate, and both parties shall immediately turn over to the other party all
copies of all Confidential Information. 
Furthermore, Vendor shall return or destroy where appropriate all
Customer Confidential Information and Customer shall immediately turn over to
Vendor the Program and Documentation, and any other Confidential Information
relating to the Program and Documentation and shall remove and erase completely
any copies of the Program installed or recorded on any hard disk or other
storage medium. Customer shall promptly certify to Vendor in writing that it
has complied with this requirement.

17.2.                       Unless
otherwise specified herein or otherwise agreed in writing, termination of this
Agreement other than by material breach of Vendor, does not relieve Customer of
its obligation to pay all fees accrued up to date of termination to include,
but not limited to all (a) fees stated in Schedule “A,” (b) Monthly License
Fees up to the full duration of the Term, and (c) installation and consultation
Fees provided pursuant to this Agreement. Except where otherwise stated,
Customer agrees that all fees collected, accrued and due shall be retained or
due Vendor without any pro rata refund to Customer.

17.3.                       The
termination of this Agreement shall not extinguish any rights or obligations of
the parties relating to protection of Confidential Information or the Customer
Confidential Information.

 

18.                   AUDIT

18.1.                       During the
term of this Agreement and one year thereafter, upon five (5) business days
advance notice and in compliance with Customer’s security rules and policies
and applicable laws and/or regulations, Vendor or Vendor representative may
enter the premises of Customer during normal business hours and perform
reasonable audit and inspection procedures to confirm that Customer is in
compliance with the terms and conditions of the Agreement.  Customer shall reasonably cooperate in any
such inquiry.  Any underpayment shall be
paid at the Vendor’s then current rate and within five (5) business days.  If any underpayment is over $500, Customer
agrees to pay the costs and expenses of audit.

 

19.                   ASSIGNMENT

19.1.                       Customer
may not assign this Agreement without Vendor’s prior written consent; provided
however that Customer may assign this Agreement or under rights granted
hereunder pursuant to a purchase of all or substantially all of Customer’s
shares upon written notice to Vendor. Any purported assignment, except as
provided for in this paragraph, shall be null and void and a material breach of
this Agreement.

 

20.                   RIGHTS TO
SOURCE PROGRAM

20.1.                       *****

 

 

4

 

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated by {*****}. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.

 

 

202. *****

20.3 *****

20.4 *****

21.                   GENERAL
PROVISIONS

21.1.                       This
Agreement shall be construed pursuant to substantive law of the State of
Delaware, and the laws of the United States.

21.2.                       All
reasonable and ordinary costs relating to the shipment of the Program and the
Documentation shall be borne by Vendor. Upon delivery of the Program and the
Documentation, Customer shall assume all risk of loss and damage to the Program
and the Documentation, and shall at its sole cost and expense replace any lost
or damaged portion thereof.

21.3.                       Customer
shall pay, in addition to the other amounts payable under this Agreement, all
local, state and federal excise, sales, use, personal property, gross receipts,
import and export tax, and similar taxes (excluding taxes imposed on or
measured by Vendor’s net income) levied or imposed by reason of the
transactions under this Agreement. Customer shall, upon demand, pay to Vendor
an amount equal to any such tax(es) actually paid or required to be collected
or paid by Vendor.

21.4.                       Customer
consents to the public use of its name, logo, and address as a customer of
Vendor provided that any disclosure pertaining to the services and/or software
used by Customer, excluding the Program, shall be subject to Customer’s prior
written consent. Vendor shall not release to the general public any Customer
Confidential Information or press release without the written consent of
Customer.

21.5.                       Vendor
consents to the public use of its name, logo, and address as a supplier of
Customer and the use of Program by Customer. All other references to the Vendor
shall be subject to Vendor’s prior written consent. Customer shall not release
to the general public any Confidential Information or press release without the
written consent of Vendor.

21.6.                       This Agreement
may not be modified or amended except in writing, which is signed by authorized
representatives from each party.

21.7.                       The failure
of either party to exercise any right or the waiver by either party of any
breach shall not prevent a subsequent exercise of such right or be deemed a
waiver of any subsequent breach of the same or any other term of the Agreement.

21.8.                       Any notice
required or permitted to be sent hereunder shall be in writing in English and
shall be sent in a manner requiring a signed receipt, such as courier delivery,
or if mailed, registered or certified mail, return receipt requested. Notice is
effective upon receipt.

21.9.                       Neither
party shall be deemed in default of this Agreement to the extent that
performance of its obligations or attempts to cure any breach are delayed or
prevented by reason not within its reasonable control, such as an act of God,
fire, storm, natural disaster, accident, act of government, labor dispute,
shortages of materials or supplies or any other cause beyond the control of
such party (“Force Majeure”) provided that such party gives the other party
written notice thereof promptly and, in any event, within fifteen (15) calendar
days of discovery thereof and uses its best efforts to cure the delay. In the
event of such Force Majeure, the time for performance or cure shall be extended
for a period equal to the duration of the Force Majeure but not in excess of
two (2) months.

21.10.                 This Agreement
constitutes the sole and entire agreement of the parties with respect to the
subject matter hereof and supersedes any prior oral or written promises or
agreements. There are no promises, covenants, or undertakings other than those
expressly set forth in this Agreement or in the Consultancy Services Agreement
signed herewith.

21.11.                 The parties
recognize that money damages may not be an adequate remedy for any breach or
threatened breach of any obligation hereunder (i) if by Customer involving
intellectual property, Confidential Information or use of the Program beyond
the scope of the license granted by this Agreement or (ii) if by Vendor
involving the Customer Confidential Information. The parties therefore agree
that in addition to any other remedies available hereunder, by law or
otherwise, the non-breaching party including any third party from whom Vendor
has licensed software or technology shall be entitled to an injunction against
any such continued breach by the breaching party.

21.12.                 During the Term,
the Program may be software locked through the use of a software key file
“Software Key” to not function after a set date, above a set version number,
outside an IP Range, or above a set number of customer records. The Customer
agrees to comply with the software lock. 
Customer acknowledges that the Program shall have a 120-day
date-restricted software lock and that the issuance of any new Software Key
shall be based on proper payments of the Monthly License Fee due throughout the
Term, and up to 120 days after the expiration of the Term so long as Customer
and Vendor are actively negotiating a new term.  Vendor shall extend the valid dates of any Software Key during
any period in which License Fee is being disputed in accordance with Section
7.2.

21.13.                 A late payment
charge of 1.5% per month compounded monthly or the maximum rate permitted by
law, whichever is less, shall apply to any payment due from Customer that is in
arrears. In addition, the Vendor may at its option suspend Software Support,
refuse to provide any additional products to the Customer and refuse to perform
or complete any consulting services for the Customer if there are any payments
due more than ten (10) business days in arrears.

 

5

 

	
  Inovaware Logo

  	
   

  
	
  2800 Woodlawn Drive, Suite 170,
  Honolulu, HI 96822

  	
   

  
	
  Voice: 808-539-3786

  	
   

  
	
  Fax: 808-539-3683

  	
   

  

 

In any legal action or
arbitration proceeding brought on account of a breach, the prevailing party
shall recover from the other party all costs of litigation or arbitration,
including reasonable attorneys fees.

21.14.                 Customer agrees to prominently display a logo
image and hyperlink provided by Vendor, subject to Customer’s branding policy,
referencing Vendor’s name, product name, and URL in all “start page” and
“sign-in” screens for any service or product for which Vendor’s product is
referenced to any third party unless otherwise approved in writing by Vendor.
If Customer is unable to reference Vendor’s logo, a text-equivalence shall be
used. Nothing herein shall restrict Vendor’s legal or equitable rights
to protect its trademarks against infringement, dilution, or misuse.

21.15.                 This Agreement
may be executed in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument. 
The provisions of this Agreement are declared to be severable. Should
any provision of this Agreement be held to be void, invalid, inoperative, or
unenforceable under applicable law, the remaining provisions of this Agreement
shall not be affected and shall continue in full effect as though such
provisions were deleted and the parties agree to negotiate in good faith a
substitute valid provision that most nearly approximates the parties’ intent.
Headings in this Agreement are included for reference only and shall not
constitute a part of this Agreement for any other purpose.

21.16.                 No action,
regardless of form, arising out of the transactions under this Agreement may be
brought by either party more than two (2) years after the cause of action
accrues.

21.17.                 Unless otherwise
agreed upon by Vendor and Customer, any cause or action arising out of or
related to this Agreement may only be brought in the defending party’s courts
of applicable jurisdiction in the United States and in no other courts, and the
parties hereby submit to the jurisdiction and venue of such courts.

21.18.                 All monetary
amounts in this Agreement are quoted and to be paid in United States dollars.

21.19.                 All disputed
charges that are later determined to be valid shall have all applicable late
fee described in Paragraph 21.13 applied to them as of the date of original due
date.

 

22.                   SALES AGREEMENT
EXPIRATION

22.1.                       THIS
AGREEMENT MUST BE SIGNED BY BOTH CUSTOMER AND VENDOR NO LATER THAN FIVE (5)
CALENDAR DAYS FROM THE DATE THE FIRST PARTY SIGNS THIS AGREEMENT OR THE PRICE
AND TERMS OFFERED MAY EXPIRE AT VENDORS DISCRETION.

 

So agreed between the parties signing below.

 

Inovaware
Corporation

 

	
  SIGNATURE:

  	
  /s/ Wai Lee

  	
   

  	
  DATE:

  	
  14-5-2003

  	
   

  
	
  PRINT NAME:

  	
  Wai Lee

  	
   

  	
  TITLE:

  	
  PS Mgr

  	
   

  

 

VIA
NET.WORKS, Inc.

 

	
  SIGNATURE:

  	
  /s/ Ray Walsh

  	
   

  	
  DATE:

  	
  13-05-08

  	
   

  
	
  PRINT NAME:

  	
  Ray Walsh

  	
   

  	
  TITLE:

  	
  SVP Technology & Engineering

  	
   

  

 

	
   

  	
   

  	
   

  
	
  Vendor's Intials /s/ WL

  	
   

  	
  Customer Initials /s/
  RW

  
	
  Confidential Document

  	
   

  	
  Inovaware Term License
  Agreement-ViaNetworks-

  
	
  3

  	
   

  	
  v3-121

  

 

6

 

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated by {*****}. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.

 

Schedule A: Program Description and Price Schedule

 

*****Certain information on
this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to
the omitted portions.*****

 

	
  Customer
  Domain:

  	
  www.vianetworks.com

  
	
  Inovaware
  Sales Agent:

  	
  Michel
  Floreani

  

 

1.     Contact Information

1.1.                  Purchaser Contact

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Company Name:

  	
   VIA NET.WORKS

  	
   

  	
   

  	
   

  
	
  Street Address:

  	
   H. Walaardt Sacréstraat 401-403

  	
   

  	
   

  	
   

  
	
  City:

  	
   1117BM Schipol (SHIPHOL OOST) 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Country:

  	
   The Netherlands

  	
   

  	
   

  	
   

  	
   

  
	
  Email:

  	
   rwalsh@vianetworks.com

  	
   

  	
   

  	
   

  	
   

  

 

1.2.  IP address on which Program will be run:                                  (Required
for software to run)

 

2.              Fees (US Dollars)

 

	
  Monthly License Fee for
  PRISM 7.2 for Unlimited Active Users

  	
   

  	
   

  
	
  Monthly License Fee RESOLVE
  Help Desk and Workflow Unlimited
  Active Users

  	
   

  	
   

  
	
  Software Maintenance

  	
   

  	
   

  
	
  Tax (If HI, TX, or CA Incorporated Company)

  	
   

  	
  N/A

  
	
  Monthly Software Escrow Fee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total Monthly Fees

  	
   

  	
  $

  	
  *****

  

 

3.                          Payment
Terms

3.1.                              Fees
outlined in Schedule A shall be due monthly and in advance for any given month
for a period of 36 months.  First
payment shall be due on the ***** calendar days from the Effective Date (“Initial
Acceptance”).

 

7

 

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.
Omissions are designated by {*****}. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.

 

SCHEDULE B:  SOFTWARE SUPPORT
SCHEDULE

 

1.                        Service
Level Agreement

1.1.                              Each
Software Support request (incident) that requires Software Support is
categorized into one of four categories: Fatal, Critical, Substantial, or
Other.  Vendor determines
classification.  The classifications are
defined as follows:

 

Software Support
Incident Classification

	
  Fatal Errors

  
	
  1.

  	
  Results in complete failure
  of the Program.

  
	
  Critical Errors

  
	
  1.

  	
  Results in
  non-availability or material improper function of any of the following
  Program functions:

  
	
   

  	
  a) essential data
  collection and storage during customer sign-up,

  
	
   

  	
  b) payment processing
  and collection modules

  
	
   

  	
  c) provisioning modules

  
	
   

  	
  d) charging
  functionality and accuracy

  
	
   

  	
  e) customer self-care
  modules,

  
	
  2.

  	
  Renders unusable any
  critical function of the “batch processing” system that comprises part of the
  standard schedule. The batch processing system consists of any function that
  is part of the standard batch processes menu including usage import
  functionality, late processing functionality, charge posting functionality,
  payment collection functionality, credit card collection functionality, and
  bill generation functionality, or;

  
	
  3.

  	
  A query from Customer
  where there is justifiable reason to believe further investigation will
  uncover a Fatal Error.

  
	
  Substantial
  Errors

  
	
  1.

  	
  An error that does not
  stop normal business operations but substantially restricts it, such as
  problems accessing the configuration software interface or;

  
	
  2.

  	
  A query from Customer
  where there is justifiable reason to believe further investigation will
  uncover a Critical Error.

  
	
  Other Errors

  
	
   

  	
  1.

  	
  Any other error or
  query that does not directly impact fatal critical, or substantial
  processing.

  

 

2.                        Response
Times

 

	
  Software Support Type

  	
   

  	
  Error Classification

  	
   

  	
  Max Response Time

  
	
  Standard

  	
   

  	
  Fatal Errors

  	
   

  	
  *****

  	
   Business Hours

  
	
  Standard

  	
   

  	
  Critical Errors

  	
   

  	
  *****

  	
   Business Hours

  
	
  Standard

  	
   

  	
  Substantial Errors

  	
   

  	
  *****

  	
   Business Hours

  
	
  Standard

  	
   

  	
  Other

  	
   

  	
  *****

  	
   Business Hours

  
	
  Premium

  	
   

  	
  All Classifications

  	
   

  	
  *****

  	
   Hours

  

 

3.                        Software
Support

3.1.                              Unless
a Premium Software Support policy is purchased, all Software Support, including
Standard Software Support, shall be performed exclusively during the Normal
Service Hours. “Normal Service Hours” shall mean the hours of on-call service
coverage, which are currently Monday through Friday from 6:30 a.m. to 3:00 p.m.
Hawaiian Standard Time excluding Hawaii State and Federal holidays and other
days off as designated by Vendor. Vendor reserves the right to change Normal
Service Hours without notice.

 

4.                        Premium
Software Support

4.1.                              Software
Support that takes place outside of “Normal Service Hours” or requests for support
made through Premium Software Support channels are classified as “Premium
Software Support.”  Customer must have
an active Software Maintenance policy and Premium Software Support Policy at
the time of the request to receive Premium Software Support.  Premium Software Support is available
twenty-four (24) hours a day, seven (7) days a week.  Customer agrees that any request for Software Support that falls
outside of Normal Service Hours or that is made through Premium Software
Support contact channels is considered a Premium Software Support request.  The minimum amount of time Premium Software
Support is billed for is two (2) hours. 
All hours beyond the first two are billed in thirty-minute increments.

 

5.                        Other
Terms

5.1.                              All
Support notifications must be routed through Vendor’s predefined support
channels. Vendor shall make available telephone number(s) and/or other contact
information to Customer in order to allow Customer to accomplish the required
notification and request information.

5.2.                              “Response
time” is the time from Customer request to the time Vendor contacts back
Customer. Vendor does not guarantee the issue will be resolved within the
Response Time.  Vendor shall use
reasonable effort to achieve the response time listed under the “Max Response
Time” column in the Response Times table. 
For each hour beyond the Max Response Time for which Vendor does not
respond to a Software Support incident, Customer shall be credited with an
equal number of hours applicable toward the then current Software Support
incident up to a maximum of 5 hours.

5.3.                              Vendor
reserves the right to change its Software Support Schedule at its sole
discretion.

 

 

8Exhibit 10.1

 

PLAYSTATION®  and PLAYSTATION® 2

LICENSED
PUBLISHER AGREEMENT

 

This LICENSED PUBLISHER AGREEMENT (the
“Agreement” or “LPA”), entered into as of 21 May, 2003 (the “Effective
Date”), by and between SONY COMPUTER ENTERTAINMENT KOREA INC., with offices at 14Fl, Koosan Tower, 3250, Bangbae2-Dong,
Seocho-Gu, Seoul, 137-853 Korea (hereinafter
“SCEK”), and THQ Korea Ltd., with offices at 1103 LG Twintel 2nd 157-3
Samsung-dong, Kangnam-gu, Seoul Korea.

 

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

 

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

 

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

 

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

 

1.      Definition
of Terms.

 

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

 

1.2     “Affiliate of SCEK” means, as applicable,
either Sony Computer
Entertainment Inc. in Japan (“SCEI”), Sony Computer Entertainment  America Inc. in the United States,
Sony Computer Entertainment Europe Ltd. in the United Kingdom, Sony Computer Entertainment Hong Kong Limited in Hong
Kong or such other
Sony Computer Entertainment entity as may be established from time to time.

 

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

 

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

 

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

 

1

 

1.5     “Development Tools” means the PS2 development tools sold or licensed by
SCEK or SCEI to a
Licensed Publisher or Licensed Developer for use in the development of
Executable Software for the System.

 

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

 

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

 

1.8     “Format Discs” means the uniquely marked
or colored (i) CD-ROM discs formatted for use with the PS, and (ii) CD-ROM or DVD-ROM discs formatted for use
with the PS2, both of which, for purposes of this Agreement, are
manufactured on behalf of Publisher and contain Licensed Products or SCEK Demo
Discs.

 

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

 

1.10  “Guidelines” shall mean any
guidelines of SCEK or
an Affiliate of SCEK
with respect to development,
creation, marketing, advertising and promotion of Licensed Products,
which may be provided by SCEK or an Affiliate of SCEK to Publisher.

 

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

 

1.12  “Licensed Developer” means any developer
that has signed a valid and then current Licensed Developer Agreement.

 

1.13  “Licensed Developer Agreement” or “LDA”
means a valid and current license agreement for the development of Licensed
Products for the System, fully executed between a Licensed Developer and SCEK
or an Affiliate of SCEK.

 

1.14   “Licensed Products” means the Executable
Software (which may be combined with Executable Software of other Licensed
Publishers or Licensed Developers), which shall consist of one product
developed for the PS2 or for PS per Unit, in final form developed exclusively for the System.  Publisher shall have no right to package or
bundle more than one product developed for the PS2 or for PS in a single Unit unless separately agreed with SCEK.

 

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

 

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

 

1.17  “Licensed Territory” means the Republic of Korea.

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.26  “PS” means  a 32-bit computer entertainment
system developed by
SCEI having the trademark “PlayStation” or “PS one”  and expressly excluding the preceding or
next generation thereof.

 

1.27  “PS2” means  a 128-bit computer
entertainment system developed
by SCEI having the trademark “PlayStation  2” and expressly excluding the preceding or
next generation thereof.

 

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

 

1.29  “SCEK Demo Disc” means any demonstration disc
developed and distributed by SCEK.

 

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

 

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

 

3

 

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

 

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

 

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

 

1.35  “Wholesale Price”
or “WSP” shall mean the Publisher’s (or, where
applicable, Publisher’s distributor’s) highest first published price (excluding taxes) of  the
Licensed Product  without
offsets, rebates or deduction from invoices of any kind as
evidenced by a sell sheet or price list issued by Publisher.

 

2.      License Grant.

 

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

 

3.      Development of
Licensed Products.

 

3.1    Right
to Develop.  This
LPA grants Publisher the right to develop Licensed Products. It also gives
Publisher the right to purchase and/or license Development Tools, as is
appropriate, from SCEK or its designated Affiliate of SCEK, pursuant to a separate Development System
Agreement with SCEK, to assist in such development. In developing Executable
Software (or portions thereof), Publisher and its Affiliate of SCEK shall fully comply in all respects with any and
all technical specifications which may from time to time be issued by SCEK. In
the event that Publisher uses third party tools to develop Executable Software,
Publisher shall be responsible for ensuring that it has obtained appropriate
licenses for such use.

 

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

 

4

 

4.      Limitations on
Licenses; Reservation of Rights.

 

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

 

4.2    Reservation
of SCEK’s Rights.

 

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

 

4.2.2    Other
Use of SCEK Materials and SCEK Intellectual Property Rights. Publisher shall not make use of any SCEK Materials or
any SCEK Intellectual Property Rights (or any portion thereof) except as
authorized by and in compliance with the provisions of this Agreement.
Publisher shall not use the Executable Software, SCEK Materials or SCEK’s
Confidential Information in connection with the development of any software for
any emulator or other computer hardware or software system. No right, license
or privilege has been granted to Publisher hereunder concerning the development
of any collateral product or other use or purpose of any kind whatsoever which
displays or depicts any of the Licensed Trademarks. The rights set forth in
Section 2 hereto are limited to the right to sublicense such rights to end
users for non-commercial use; any public performance relating to the Licensed
Product or the System is prohibited unless expressly authorized in writing by
SCEK.

 

4.3    Reservation
of Publisher’s Rights.  Separate and
apart from SCEK Materials and other rights licensed to Publisher by SCEK
hereunder, as between Publisher and SCEK, Publisher retains all rights,

 

5

 

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

 

4.4    Guidelines Requirement. 
Publisher shall be required to comply with all the provisions of Guidelines, including without limitation the “Technical Requirements Checklist” therein, which is required technical
specification for Licensed Products, when published, or within a commercially reasonable
time following its publication to incorporate such provisions, as if such
provisions were set forth in this Agreement.

 

5.      Quality
Standards for the Licensed Products.

 

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

 

5.2    Product
Proposals.

 

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

 

5.2.2        Approval
of Product Proposal. 
After SCEK’s review of Publisher’s Product Proposal, Publisher will
receive written notice from SCEK of the status of the Product Proposal, which
may range from “Approved” to “Not Approved.” Such conditions shall have the
meanings ascribed to them in Guidelines, and may be changed from time to
time by SCEK. If a Product Proposal is “Not Approved”, then neither Publisher
nor any other Licensed Developer or Licensed Publisher may re-submit such
Product Proposal without significant, substantive revisions. SCEK shall have no
obligation to approve any Product Proposal submitted by Publisher. Any
development conducted by or at the direction of Publisher and any legal
commitment relating to development work shall be at Publisher’s own financial
and commercial risk.  Publisher shall
not construe approval of a Product Proposal as a commitment by SCEK

 

6

 

 to grant final approval to such Licensed
Product. Nothing herein shall restrict SCEK from commercially exploiting any
coincidentally similar concept(s) and/or product(s), which have been independently
developed by SCEK, an Affiliate of SCEK or any third party.

 

5.2.3        Changes
to Product Proposal. Publisher shall notify SCEK promptly
in writing in the event of any material proposed change in any portion of the
Product Proposal. SCEK’s approval of a Product Proposal shall not obligate
Publisher to continue with development or production of the proposed Licensed
Product, provided that Publisher must immediately notify SCEK in writing if it
discontinues, cancels or otherwise delays past the original scheduled delivery
date the development of any proposed Licensed Product. In the event that
Publisher licenses a proposed Licensed Product from another Licensed Publisher
or a Licensed Developer, it shall immediately notify SCEK of such change and
must re-submit such Licensed Product to SCEK for approval in accordance with
the provisions of Section 5.2.1 above.

 

5.3    Work-in-Progress.

 

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

 

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

 

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

 

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

 

7

 

Publisher must sign an
accountability form stating that (a) Publisher approves the release of such
Executable Software for manufacture in its current form and (b) Publisher shall be fully responsible
for any problems related to such Executable Software.

 

5.5    Printed
Materials.

 

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

 

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

 

5.6    Advertising
Materials.

 

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

 

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

 

5.7    Rating
Requirements.  If required by SCEK or any governmental
entity, Publisher shall submit each Licensed Product to a consumer advisory
ratings system designated by SCEK and/or such governmental entity for the
purpose of obtaining rating code(s) for each Licensed Product. Any and all
costs and expenses incurred in connection with obtaining such rating code(s)
shall be borne solely by Publisher. Any required consumer advisory rating
code(s) procured hereby shall be displayed on the

 

8

 

Licensed Product and in
the associated Printed Materials and Advertising Materials, at Publisher’s cost
and expense, in accordance with Guidelines or
other documentation provided by SCEK to Publisher.

 

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

 

6.      Manufacture of
the Licensed Products.

 

6.1    Manufacture
of Units. Upon
approval of Executable Software and associated Printed Materials pursuant to
Section 5, SCEK will, in accordance with the terms and conditions set
forth in Exhibit A, and at
Publisher’s expense manufacture Units. 
Publisher shall comply with all Manufacturing Specifications related to
the particular terms set forth herein. 
SCEK reserves the right to insert or require the Publisher to insert
certain Printed Materials relating to the System or Licensed Trademarks into
each Unit.

 

6.2    Manufacturing
Facilities. To insure compatibility of the Format Discs with the
System, consistent quality of the Licensed Product and incorporation of
anti-piracy security systems, Publisher shall purchase ****Units from SCEK during the term of the
Agreement.

 

7.      Marketing and
Distribution.

 

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

 

7.2    Samples. 
Publisher shall provide to SCEK, at no additional cost, for SCEK’s
internal use, **** copies of each Licensed Product.  Publisher shall pay any manufacturing costs
to the Designated Manufacturing Facility in accordance with Exhibit A, but
shall not be obligated to pay royalties, in connection with such sample Units.  SCEK shall not directly or indirectly resell any such
sample copies of the Licensed Products without Publisher’s prior written
consent.  SCEK may give sample copies to its employees, provided
that it uses its reasonable efforts to ensure that such copies are not sold
into the retail market.  In addition,
subject to availability, Publisher shall sell to SCEK additional quantities of
Licensed Products at the Wholesale Price for such Licensed Product.  Any changes to SCEK’s policy regarding
sample Units shall be set forth in the Guidelines.

 

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

 

9

 

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

 

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

 

7.4.1    SCEK
Demo Discs.

 

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

 

7.4.1.2    Submission and Approval of Product Information. Upon receipt of written notice that SCEK
has tentatively chosen Publisher’s Product Information for inclusion in an SCEK
Demo Disc, Publisher shall deliver to SCEK such requested Product Information
by no later than the deadline set forth in such notice. Separate notice will be
sent for each SCEK Demo Disc, and Publisher must sign each notice prior to
inclusion in such SCEK Demo Disc. Publisher shall include its own Legal Copy on
the title screen or elsewhere in the Product Information submitted to SCEK.
SCEK shall only provide the Generic Line on the SCEK Demo Disc title screen and
packaging. Publisher’s Product Information shall comply with SCEK’s technical
specifications provided to Publisher. SCEK reserves the right to review and
test the Product Information provided and request revisions prior to inclusion
on the SCEK Demo Disc. If SCEK requests changes to the Product Information and
Publisher elects to continue to participate in such Demo Disc, Publisher shall
make such changes as soon as possible after receipt of written notice of such
requested changes from SCEK, but not later than the deadline for receipt of
Product Information.  Failure to make
such changes and provide the modified Product Information to SCEK by the
deadline shall result in the Product Information being removed from the SCEK
Demo Disc.  Costs associated with
preparation of Product Information supplied to SCEK shall be borne solely by
Publisher. Except as otherwise provided in this Section, SCEK shall not edit or
modify Product Information provided to SCEK by Publisher without Publisher’s
consent, not to be unreasonably withheld. SCEK shall have the right to use
subcontractors to assist in the development of any SCEK Demo Disc. With respect
to Product Information provided by Publisher in demo form, the demo delivered
to SCEK shall not constitute the complete Licensed Product and shall be, at a
minimum, an amount sufficient to demonstrate the Licensed Product’s core
features and value, without providing too much information so as to give
consumers a disincentive to purchase the complete Licensed Product.

 

10

 

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

 

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

 

7.4.2    Third
Party Demo Discs.

 

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

 

7.4.2.2 Submission and Approval of
Third Party Demo Discs. Publisher shall deliver to SCEK, for SCEK’s prior
approval, a final version of each Third Party Demo Disc in a format prescribed
by SCEK. Such Third Party Demo Disc shall comply with all requirements provided
to Publisher by SCEK in the Guidelines or otherwise. In addition, SCEK shall
evaluate the Third Party Demo Disc in accordance with the approval provisions
for Executable Software and Printed Materials set forth in Sections 5.4 and
5.5, respectively.  Furthermore,
Publisher shall obtain the approval of SCEK in connection with any Advertising
Materials relating to the Third Party Demo Discs in accordance with the
approval provisions set forth in Section 5.6. Costs associated with Third Party
Demo Discs shall be borne solely by Publisher. No approval by SCEK of any
element of any Third Party Demo Disc shall be deemed an approval of any other
element thereto, nor does any such approval constitute final approval for the
related Licensed Product. Unless otherwise permitted by SCEK, Publisher shall
clearly and conspicuously state on all Third Party Demo Disc Packaging and
Printed Materials that the Third Party Demo Disc is for promotional purposes
only and not for resale.

 

7.4.2.3  Manufacture and Royalty of Third Party Demo Discs. Publisher shall comply with all
Manufacturing Specifications with respect to the manufacture and payment for
manufacturing costs of Third Party Demo Discs, and Publisher shall also comply
with all terms and conditions of Section 6 hereto. No costs incurred in the
development, manufacture, licensing, production, marketing and/or distribution

 

11

 

(and if permitted by
SCEK, sale) of the Third Party Demo Disc shall be deducted from any amounts
payable to SCEK hereunder. Royalties on Third Party Demo Discs shall be as
provided in Exhibit B.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.7                 Distribution.

 

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

 

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

 

12

 

Territory.

 

7.8      Report.  Upon SCEK’s request, Publisher shall report per title
quantity of shipment and a name of a receiving party of the Licensed Products,  to SCEK.

 

8.      Royalties.

 

Publisher shall pay SCEK
a per title royalty for each Unit of the Licensed Products manufactured, in
accordance with the terms and conditions set forth in Exhibit B.

 

9.      Representations and Warranties.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)    Publisher has obtained the consent of all holders
of intellectual property rights required to be obtained in connection with use
of any Product Information by SCEK as licensed hereunder, and Product
Information when provided to SCEK in accordance with the terms of this
Agreement may be published,

 

13

 

marketed, distributed and
sold by SCEK in accordance with the terms and conditions of this Agreement and
without SCEK incurring any royalty, residual, union, guild or other fees;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10.    Indemnities;
Limited Liability.

 

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

 

10.2  Indemnification
By Publisher.  Publisher shall indemnify and hold SCEK
harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim, which result from or are in
connection with (i) a breach of any of the provisions of this Agreement; or
(ii) infringement of a third party’s intellectual property rights by 

 

14

 

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

 

10.3  LIMITATION
OF LIABILITY.

 

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

 

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

 

10.4  DISCLAIMER
OF WARRANTY.  EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH HEREIN, NEITHER SCEK NOR ITS AFFILIATES AND
SUPPLIERS MAKE, NOR DOES PUBLISHER RECEIVE, ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, REGARDING THE SCEK MATERIALS, SCEK’S
CONFIDENTIAL INFORMATION, THE SYSTEM, THE UNITS
OF THE LICENSED PRODUCTS MANUFACTURED HEREUNDER AND/OR PUBLISHER’S

 

15

 

PRODUCT INFORMATION INCLUDED ON SCEK DEMO DISCS.  SCEK SHALL NOT BE LIABLE FOR ANY INJURY,
LOSS OR DAMAGE, DIRECT, INDIRECT OR CONSEQUENTIAL, ARISING OUT OF THE USE OR
INABILITY TO USE ANY UNITS AND/OR ANY SOFTWARE ERRORS AND/OR “BUGS” IN
PUBLISHER’S PRODUCT INFORMATION WHICH MAY BE REPRODUCED ON SCEK DEMO DISCS.  WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SCEK AND ITS AFFILIATES AND SUPPLIERS EXPRESSLY DISCLAIM THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND THEIR
EQUIVALENTS UNDER THE LAWS OF ANY JURISDICTION, REGARDING THE SCEK MATERIALS,
SCEK’S CONFIDENTIAL INFORMATION, LICENSED PRODUCTS, SCEK DEMO DISCS AND THE
SYSTEM. 11. SCEK Intellectual Property Rights.

 

11.    SCEK Intellectual
Property Rights.

 

11.1   Licensed
Trademarks.  The Licensed Trademarks and the goodwill associated
therewith are and shall be the exclusive property of SCEK or Affiliates of
SCEK. Nothing herein shall give Publisher any right, title or interest in or to
any of the Licensed Trademarks or any other trademarks of SCEK, other than the
non-exclusive license provided herein. 
Publisher shall not do or cause to be done any act or thing in any way
impairing or tending to impair or dilute any of SCEK’s rights, title or
interests in or to any of the Licensed Trademarks or any other trademarks of
SCEK, nor shall Publisher register any trademark in its own name or in the name
of any other person or entity, or obtain rights to employ Internet domain names
or addresses, which are similar to or are likely to be confused with any of the
Licensed Trademarks or any other trademarks of SCEK.

 

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

 

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

 

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

 

13.    Confidentiality.

 

13.1                   SCEK’s
Confidential Information.

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13.2         Publisher’s
Confidential Information.

 

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

 

(i) any Product Software
as provided to SCEK pursuant to this Agreement and all documentation and
information relating thereto, including Product Proposals, Printed Materials
and Advertising Materials (other than documentation and information intended
for use by and release to end users, the general public or the trade);

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding the
foregoing, SCEK may disclose the Publisher’s
Confidential Information to its parent, subsidiaries or the parent’s
subsidiaries whose duties justify a “need-to-know”, provided that SCEK has
caused such entities to be bound by the obligations of this Agreement to the
same extent as it is bound hereby.

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

13.2.5        SCEK’s Obligations Upon Unauthorized Disclosure.  If at any time SCEK becomes aware of any
unauthorized duplication, access, use, possession or knowledge of any of
Publisher’s Confidential Information, it shall notify Publisher as soon as is
reasonably practicable.  SCEK shall
provide any and all reasonable assistance to Publisher to protect Publisher’s
proprietary rights in any of Publisher’s Confidential Information that it or
its employees or permitted subcontractors may have directly or indirectly
disclosed or made available and that may be duplicated, accessed, used,
possessed or known in a manner or for a purpose not expressly authorized by
this Agreement including but not limited to enforcement of confidentiality
agreements, commencement and prosecution in good faith (alone or with the
disclosing party) of legal action, and reimbursement for all reasonable
attorneys’ fees, costs and expenses incurred by Publisher to protect its
proprietary rights in Publisher’s Confidential Information. SCEK shall take all
reasonable steps requested by Publisher to prevent the recurrence of any
unauthorized duplication, access, use, possession or knowledge of Publisher’s
Confidential Information.

 

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

 

(i)      to legal counsel;

 

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

 

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

 

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

 

14.    Term and
Termination.

 

14.1  Effective
Date; Term.  This Agreement shall not be binding on the
parties until it has been signed by each party, in which event it shall be
effective from the Effective Date until March 31, 2004, unless earlier terminated pursuant to
Section 14.2. The term shall be automatically extended for additional one-year
terms thereafter, unless either party provides the other with written notice of
its election not to so extend on or before January 31 of the applicable year.
Notwithstanding the foregoing the term for the protection of SCEK’s
Confidential Information and Publisher’s Confidential Information shall be as
set forth in Sections 13.1.2 and 13.2.2 respectively.

 

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

 

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

 

20

 

(ii)    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 of all or substantially all of
Publisher’s property, whether tangible or intangible, wherever located.

 

(iii) The making
by Publisher of a general assignment for the benefit of creditors.

 

(iv) The
commencing by Publisher or Publisher’s intention to commence a voluntary case
under any applicable bankruptcy laws (as now or hereafter may be in effect).

 

(v) The
adjudication that Publisher is a bankrupt or insolvent.

 

(vi) The filing
by Publisher or the intent to file by Publisher of a petition seeking to take
advantage of any other law providing for the relief of debtors.

 

(vii) Publisher’s
acquiescence in, intention to acquiesce to, or failure to have dismissed within
ninety (90) days, any petition filed against it in any involuntary case under
any such bankruptcy law.

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

14.5  No Refunds. 
In the event of the termination of this Agreement in accordance with any
of the provisions of Sections 14.2 through 14.3 above, no portion of any payments of any kind
whatsoever previously provided to SCEK hereunder shall be owed or be repayable
to Publisher.

 

15.    Effect of
Expiration or Termination.

 

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

 

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

 

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

 

15.4  Return
of SCEK Materials and Confidential Information. 
Upon the expiration or earlier termination of this Agreement, Publisher
shall immediately deliver to SCEK, or if and to the extent requested by SCEK
destroy, all SCEK Materials and any and all copies thereof, and Publisher and
SCEK shall, upon the request of the other party, immediately deliver to the
other party, or if and to the extent requested by such party destroy, all
Confidential Information of the other party, including any and all copies
thereof, which the other party previously furnished to it in furtherance of
this Agreement.  Within

 

22

 

five (5) business days
after any such destruction, Publisher and/or SCEK, as appropriate, shall
provide the other party with an affidavit of destruction and an itemized
statement, each certified to be accurate by an officer of Publisher, indicating
the number of copies and/or units of the SCEK Materials and/or Confidential
Information which have been destroyed, the location and date of such
destruction and the disposition of the remains of such destroyed
materials.  In the event that Publisher
fails to return the SCEK Materials or Confidential Information and SCEK must
resort to legal means (including without limitation any use of attorneys) to
recover the SCEK Materials or Confidential Information or the value thereof,
all costs, including SCEK’s reasonable attorney’s fees, shall be borne by
Publisher, and SCEK may, in addition to SCEK’s other remedies, withhold such
amounts from any payment otherwise due from SCEK to Publisher under any
agreement between SCEK and Publisher.

 

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

 

16.    Miscellaneous
Provisions.

 

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

 

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

 

16.3  Force
Majeure.  Neither SCEK nor Publisher shall be liable
for any loss or damage or be deemed to be in breach of this Agreement if its
failure to perform or failure to cure any of its obligations under this
Agreement results from any event or circumstance beyond its reasonable control,
including, without limitation, any natural disaster, fire, flood, earthquake or
other Act of God; shortage of equipment,

 

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

 

23

 

materials, supplies or
transportation facilities; strike or other industrial dispute; war or
rebellion; shutdown or delay in power, telephone or other essential service due
to the failure of computer or communications equipment or otherwise; provided,
however, that the party interfered with gives the other party written notice
thereof promptly, and, in any event, within fifteen (15) business days of
discovery of any such Force Majeure condition. If notice of the existence of
any Force Majeure condition is provided within such period, the time for
performance or cure shall be extended for a period equal to the duration of the
Force Majeure event or circumstance described in such notice, except that any
such cause shall not excuse the payment of any sums owed to SCEK prior to,
during or after any such Force Majeure condition.  In the event that the Force Majeure condition continues for more
than sixty (60) days, SCEK may terminate this Agreement for cause by providing
written notice to Publisher to such effect.

 

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

 

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

 

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

 

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

 

24

 

the performance by the
parties of this Agreement. Each party, at its own expense, shall negotiate and
obtain any approval, license or permit required in the performance of its
obligations, and shall declare, record or take such steps to render this
Agreement binding, including, without limitation, the recording of this
Agreement with any appropriate governmental authorities (if required).

 

16.8  Governing
Law; Consent to Jurisdiction.  This
Agreement shall be governed by and interpreted in accordance with the laws of Korea, excluding that body of law related to
choice of laws. Any action or proceeding brought to enforce the terms of this
Agreement or to adjudicate any dispute arising hereunder shall be brought in  Seoul
District Court. Each
of the parties hereby submits itself to the exclusive jurisdiction and venue of
such courts for purposes of any such action and agrees that any service of
process may be effected by delivery of the summons in the manner provided in
the delivery of notices set forth in Section 16.1 above.  In addition, each party hereby waives the
right to a jury trial in any action or proceeding related to this Agreement.

 

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

 

16.10         Remedies. 
Unless expressly set forth to the contrary, either party’s election of
any remedies provided for in this Agreement shall not be exclusive of any other
remedies, and all such remedies shall be deemed to be cumulative.  Any breach of Sections 3, 4, 5, 6.1, 11 and
13 of this Agreement would cause significant and irreparable harm to SCEK, the
extent of which would be difficult to ascertain.  Accordingly, in addition to any other remedies including without
limitation equitable relief to which SCEK may be entitled, in the event of a
breach by Publisher or any of its employees or permitted subcontractors of any
such Sections of this Agreement.  In
addition, if Publisher fails to comply with any of its obligations as set forth
herein, SCEK shall be entitled to an accounting and repayment of all forms of
compensation, commissions, remuneration or benefits which Publisher directly or
indirectly realizes as a result of or arising in connection with any such
failure to comply.  Such remedy shall be
in addition to and not in limitation of any injunctive relief or other remedies
to which SCEK may be entitled under this Agreement or otherwise at law or in
equity.  In addition, Publisher shall
indemnify SCEK for all losses, damages, liabilities, costs and expenses
(including reasonable attorneys’ fees and all reasonable related costs) which SCEK
may sustain or incur as a result of any breach under this Agreement.

 

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

 

16.12         Sections
Surviving Expiration or Termination.  The following
sections shall survive the expiration or earlier termination of this Agreement
for any reason: 4, 5.8, 6, 8, 9, 10, 11, 13, 14.5, 15, and 16.

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  SCEK

  	
  PUBLISHER

  
	
  Sony Computer Entertainment  Korea Inc.

  	
  THQ
  Korea Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Yeo-Eul Yoon

  	
   

  	
  By:

  	
  /s/ Sang Keun Park

  
	
   

  	
   

  
	
  Print Name: Yeo-Eul Yoon

  	
  Print Name: Sang Keun Park

  
	
   

  	
   

  
	
  Title: President

  	
  Title: Country Manager

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
  2003/5/22

  
								

 

NOT
AN AGREEMENT UNTIL

EXECUTED BY BOTH PARTIES

 

26

 

Exhibit
A

 

Manufacture of the Licensed Products.

 

1.    Creation of Original Master.

 

1.1     SCEK shall create from one of the fully approved
Master Discs, which is provided by Publisher pursuant to Section 5.4 of this Agreement, the original master,
from which all other copies of the Licensed Product are to be replicated.  Publisher shall be responsible for the costs
of producing such original master in
accordance with Section 6 of this Exhibit.  In order to insure against loss or damage to the copies of the
Executable Software furnished to SCEK, Publisher will retain duplicates of all
Master Discs, and SCEK shall not
be liable for loss of or damage to any Master Discs or Executable
Software.  Upon creation of such original master, SCEK shall incorporate its anti-piracy
security systems.  Such anti-piracy security systems may, at SCEK’s sole discretion, be changed or
updated from time to time.

 

1.2     After creation of the original master as set forth in Section 1.1 of this
Exhibit, SCEK shall manufacture a
sample of Licensed Product using such original master and submit such sample to
Publisher.  Publisher shall review and
test such sample in accordance with procedure designated by SCEK.

 

1.3     Upon completion of testing as set forth in Section 1.2 of this Exhibit, Publisher
shall notify its result to SCEK. 
Publisher may order Licensed Products after notice of acceptance to
SCEK.

 

1.4      All original master shall
be and remain the sole property of SCEK.
 SCEK
shall use any original master for
the limited purposes of manufacturing of
Licensed Products and for no other purpose.

 

2.           Orders.

 

2.1     Publisher shall issue to SCEK a purchase order in an orderly manner
designated by SCEK (“Purchase Order”).

 

2.2     Purchase Orders shall be deemed accepted by SCEK within two (2) business days after receipt thereof unless otherwise notified to Company within such two (2) days period.  
Purchase orders issued by Publisher to SCEK for each Licensed Product approved by SCEK
shall be non-cancelable unless expressly accepted in writing by SCEK.

 

2.3     Minimum order quantities shall be ****  Units for initial orders, and ****  Units for re-orders per
title of
Licensed Products.

 

3.   Printed Materials.

 

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

 

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

 

27

 

3.2     Not withstanding section 3.1, Publisher
may elect his own manufacturing facility for manufacturing its own Printed Materials, in
accordance with the terms and conditions set forth in Exhibit C.

 

3.3     Upon each Purchase Order,
Publisher shall be required to supply SCEK with all necessary quantities of Printed Materials at least three (3) business days prior to start
date of manufacturing by SCEK.  Printed Materials shall be delivered to
mutually agreed upon place.

 

3.4     SCEK shall not be responsible for any delays or default of delivery of Licensed Products arising from any reasons not attributable to SCEK, including
but no limited to delays or
default of delivery of Printed Materials by Publisher or detects of
Printed Materials.

 

4.    Delivery
of Licensed Products.

 

4.1   SCEK shall deliver, at its own expense, Licensed Products to mutually agreed upon place

 

4.2   Publisher
acknowledges that packages for delivery
of License Products shall be subject to SCEK’s specification.  All expense for such packages shall be borne
by SCEK.

 

4.3   Proprietary title and the risk of
loss or damage to the Licensed Products
shall pass to Publsher at
point of delivery pursuant to Section 4.1
of this Exhibit.

 

5.    Acceptance.

 

5.1   Publisher shall confirm the Licensed Products delivered by SCEK
immediately and notify SCEK of any shortage, wrong articles or
defect, if any.  If SCEK received such notice from Publisher,
SCEK shall, at its own expense, fill promptly such shortage or deliver
alternative Licensed Products.

 

5.2   If Publisher discovers any latent defects of
Licensed Products within **** delivery of such Licensed Products, Publisher shall notify SCEK of such latent defect and SCEK shall deliver promptly alternative Licensed Products 
after receipt of such notice.  Notwithstanding above, SCEK shall
not be responsible for any latent defect of Licensed
Products arising from any reasons not
attributable to SCEK.

 

5.3   Unless set forth in Section 5.1 and 5.2 of this
Exhibit, SCEK shall not be
responsible for any defects of Licensed Products..

 

6.    Manufacturing Fee.

 

6.1 
Manufacturing fee in connection with any title for PS of Licensed
Products shall be determined pursuant to
Units as provided below.

 

PS

 

a)
Format Disc

 

	
  CD-ROM ****

  	
  ****

  
	
  CD-ROM ****

  	
  ****

  

 

 

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

 

28

 

b)
Case 

 

	
  P case

  	
  *****

  
	
  PlayStation case

  	
  ****

  

 

The above price includes assembly
services.

 

c)
Mastering

 

	
  CD-ROM

  	
  ****

  

 

d)
Standard Lead Time per title of Licensed Products shall be determined by SCEK’s sole discretion.

 

6.2  
Manufacturing fee in connection with any title for PS2 of Licensed
Products shall be determined pursuant to
Units as provided below.

 

PS2

 

a)
Format Disc

 

	
  Period

  Specification

  	
  ****

  	
  ****

  
	
  CD-ROM ****

  	
  ****

  	
  ****

  
	
  DVD-ROM ****

  	
  ****

  	
  ****

  
	
  DVD-ROM ****

  	
  ****

  	
  ****

  

 

In case of **** will be added.

 

b)
Case

 

	
  Period

  Specification

  	
  ****

  	
  ****

  
	
  PS2 Case

  	
  ****

  	
  ****

  
	
  Disc Holder for 2 Discs

  	
   

  	
  ****

  

The above price includes assembly
services.

 

c)
Mastering

 

	
  CD-ROM

  	
  ****

  
	
  DVD-ROM ****

  	
  ****

  
	
  DVD-ROM ****

  	
  ****

  

 

d)
Standard Lead Time per title of Licensed Products shall be determined by SCEK’s sole discretion.

 

6.3      In case of change of circumstances which makes
the manufacturing fee set forth in this Section impossible or infeasible for SCEK to perform such as significant change of price of raw materials or SCEK’s payment amount to any third party or rapid change of
economic situations, both parties shall enter into negotiation for regarding revision of the manufacturing fee.

 

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

 

29

 

7       Payment.

 

7.1        Prior to initial order of
each title of Licensed Products, Publisher shall pay the mastering fees to SCEK
in accordance with an invoice issued by SCEK.

 

7.2       Purchase Orders will be invoiced as soon as reasonably
practical after receipt.  All amounts hereunder shall be payable in
Korean Won.  All associated banking charges with respect
to payments of manufacturing fees shall be borne solely by Publisher.  Similarly, there shall be no deduction from manufacturing
fees for any taxes (excluding withholding tax), fees, assessments or expenses of any kind which may be incurred by
Publisher arising with respect to the payment of manufacturing fees hereunder. In addition to the manufacturing
fees payments
provided to SCEK hereunder, Publisher shall be solely responsible for and bear
any cost relating to any withholding taxes or other such assessments which may
be imposed by any governmental authority with respect to the manufacturing
fees paid to SCEK.
Publisher shall provide SCEK with official tax receipts or other such
documentary evidence issued by the applicable tax authorities sufficient to
substantiate that any such taxes or assessments have in fact been paid.

 

7.3       Manufacturing  fees shall be converted
into Korean Won using the TTS rate quoted by Korea Exchange Bank
on the invoice issuance date.  Terms for cash-in-advance payments shall
be as set forth in the invoice.  Each invoice
shall be paid on a cash-in-advance basis.  All payment hereunder shall be payable in Korean Won by
Telegraphic Transfer remittance to Publisher’s bank account.

 

7.4       Any modification or amendment of payment conditions for
Manufacturing fee and Royalty set forth in this Agreement shall be determined by SCEK’s
sole discretion and shall be noticed to Publsher.

 

8. Credit Terms.

 

 SCEK may at its sole discretion extend credit
terms and limits to Publisher.  SCEK may
also revoke such credit terms and limits at its sole discretion.  If Publisher qualifies for credit terms,
then orders will be invoiced upon shipment of Licensed Products and each
invoice will be payable within payment due date of of the invoice.  Any overdue sums shall bear interest at the rate of ****  percent per year, or such lower rate as may be the
maximum rate permitted under applicable law, from the date when payment first
became due to and including the date of payment thereof.  Publisher shall be additionally liable for
all costs and expenses of collection, including without limitation, reasonable
fees for attorneys and court costs.  This
Section 8 also shall be applied to the Royalty payment condition stipulated in
Exhibit B section 3.

 

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

 

9.1  Publisher may order a test
disc for DVD-ROM dual layer to SCEK. 
Section 1.1, 1.2, 2.1, 2.2, 4 and 5 of this Exhibits shall be applied correspondingly to manufacturing of such test disc.

 

9.2  Manufacturing fees of the test
disc shall be determined depending on pieces as provided below.  Manufacturing orders will be invoiced as soon as reasonably practical
after receipt.  Publisher
shall pay such manufacturing fees to SCEK in accordance with an invoice issued
by SCEK.

 

	
  Up to ****

  	
  ****

  
	
  Over ****

  	
  ****

  

 

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

 

30

 

Exhibit  B

 

Royalties

 

1. Applicable
Royalties on Licensed Products.

 

1.1 Publisher shall pay SCEK, either directly or through its designee, a per title royalty
in KRW for each Unit of the
Licensed Products manufactured based on the initial Wholesale Price of the
Licensed Product, as follows: 

 

	
   

  	
   

  	
  Wholesale
  Price(excluding tax)

  	
   

  	
  Per Title
  Royalty

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  

 

1.2 In the absence of satisfactory evidence to support the WSP, SCEK shall have a right to determine the
WSP from the highest retailer price of Licensed Products on the market.

 

1.3 Royalties on additional orders to manufacture a specific
Licensed Product shall be the royalty determined by the initial Wholesale Price
as reported by Publisher for that Licensed Product regardless of the wholesale
price of the Licensed Product at the time of reorder, except in the event that
the Wholesale Price **** for such Licensed Product, in which case the royalty
shall be adjusted **** to reflect the **** Wholesale Price.  Licensed Products qualifying for SCEK’s “Mega Hits” programs or other programs offered by SCEK shall be subject to the royalties
applicable for such programs. Publisher acknowledges that as of the date of
execution of this Agreement no “Mega
Hits” program exists for the PS
2 Third Party licensing program.

 

1.4 At the time of placing an purchase order to manufacture a Licensed Product, Publisher
shall submit to SCEK an
accurate accounting statement setting out the number of units of Licensed
Product to be manufactured, projected initial wholesale price, applicable
royalty, and total amount due SCEK.  In addition, Publisher shall submit to SCEK prior to placing the initial
order for each Licensed Product a separate certification, signed by officers of
Publisher that certifies that the Wholesale Price provided to SCEK is accurate and attaching such
documentation supporting the WSP as requested by SCEK.

 

2.      Third Party Demo Disc Program Royalties.

 

Publisher shall pay SCEK
a per Unit royalty in ****
Won (KRW ****) for each
Third Party Demo Disc Unit manufactured. The quantity of Units ordered shall
comply with the terms of such SCEK Established Third Party Demo Disc Program.  From the ****, the Third Party Demo Disc program royalties set
forth in this section 2 shall be **** to **** Korean Won (KRW ****) for each
Third Party Demo Disc Unit manufactured.

 

3.      Payment.

 

The
invoice issued pursuant to
Section 7.2 of Exhibit A will
include royalties payable hereto for each Unit of Licensed Products
ordered.  Each invoice shall be paid on a cash-in-advance basis.  Terms for

 

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

 

31

 

cash-in-advance payments
shall be as set forth in the invoice.  All amounts
hereunder shall be payable in Korean Won.  All associated banking charges with respect
to payments of royalties shall be borne solely by Publisher.  Similarly,
there shall be no deduction from the royalties for any credits, discounts,
allowances or returns which Publisher may credit or otherwise grant to any
third party customer of any Units of the Licensed Products, or for any taxes
(excluding withholding
tax), fees, assessments or expenses of any kind which may be incurred
by Publisher in connection with its sale or distribution of any Units of the
Licensed Products or arising with respect to the payment of royalties
hereunder. In addition to the royalty payments provided to SCEK hereunder,
Publisher shall be solely responsible for and bear any cost relating to any
withholding taxes or other such assessments which may be imposed by any governmental
authority with respect to the royalties paid to SCEK. Publisher shall provide
SCEK with official tax receipts or other such documentary evidence issued by
the applicable tax authorities sufficient to substantiate that any such taxes
or assessments have in fact been paid.  All payment hereunder shall be payable in Korean Won by Telegraphic Transfer remittance to Publisher’s bank account.

 

4.      Global Volume Discount

 

4.1     Publisher shall be eligible to
participate in a rebate program set forth in this Section.  Notwithstanding Section 14.4, if Publisher qualifies for such rebates
as set forth herein, rebates shall be paid
to Publisher’s account as provided below.

 

4.2     In this
Exhibit, the following words and phrases have the following meanings:

 

(a)         “Region” means Licensed
Territory or territory where SCEG except for SCEK grants the license equivalent with the one set
forth in Section 2 of this Agreement, respectively.

 

(b)        “SCEG Licensee(s)” means any publisher that has signed a valid and then current
Licensed Publisher Agreement or an
alternative agreement with substantially the same provisions in Regions.

 

(c)         “Publisher’s Affiliates”
means SCEG Licensees of which Publisher directly or indirectly
hold more than fifty
percent (50%) of outstanding shares or securities (representing the right to
vote for the election of directors or other managing authority), or which directly or indirectly hold more than fifty percent (50%) of outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) of Publisher.

 

(d)        “ PS business” means SCEG Licensee’s business activities relating to or concerning  development and publishing of Licensed Products.

 

(e)         “SCEG” means SCEK, SCEI, Sony Computer
Entertainment America Inc. or Sony Computer Entertainment Europe Limited.

 

4.3     The discount level applied to each Fiscal Year (“Discount Level”) shall be
determined from the chart below, in accordance with the total quantity of Units
of Licensed Products (not including those in **** or any other equivalent thereof) for each
Region which was delivered to Publisher or Publisher’s Affiliates in excess of **** Units per title during the preceding Fiscal
Year.

 

	
  Units  Delivered

  	
   

  	
  Discount
  Level

  
	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  

 

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

 

32

 

4.4    Rebate rates applied to the Licensed Products (not including those in **** royalty)
for the Licensed Territory delivered to Publisher or Publisher’s Affiliate (“Rebate
Rate”)  shall be determined from the
chart below in accordance with the Discount Level and the delivered quantity of
each Fiscal Year.

 

	
  Discount Level

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Units Delivered

  	
   

  	
  Level 0

  	
   

  	
  Level 1

  	
   

  	
  Level 2

  	
   

  	
  Level 3

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  	
   

  	
  ****

  

 

4.5     The rebate shall be calculated at the end of each Fiscal Year.  SCEK
shall pay the rebate amount in
a lump sum on **** (in case of a holiday, on the next business day) of the following Fiscal Year. Rebate amount is round off to the one KRW..

 

4.6     For purposes of determining the Discount Level  and the Rebate Rate ,  a sequel title of the Licensed Products shall be
considered to be different from the
preceding titles.

 

4.7     Prior to the beginning of each Fiscal Year, Publisher shall submit to SCEK the list of Publisher’s Affiliates
to be qualified for the rebate, and shall obtain SCEK’s confirmation on such list.  In case
of any revision in such list during each Fiscal Year, Publisher shall obtain SCEK’s confirmation thereon.

 

4.8     If the list of Publisher’s Affiliates is revised
, Discount Level shall be redetermined by recalculating Units of Licensed Products delivered to Publisher and
then current Publisher’s Affiliates during the preceding Fiscal Year.  The redetermined Discount Level
shall apply as of the revision date

 

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

 

33

 

4.9     If Publisher or
any Publisher’s Affiliates assigns its entire or any part of PS Business to any
other third party or succeeds to any third party’s entire or any part of PS
Business, Discount Level shall be redetermined by recalculating the quantity of
Units of Licensed Products delivered during the preceding
Fiscal Year with adjustment to such assigned or succeeded PS Business.  The redetermined Discount Level
shall apply as of such assignment or succession.

 

4.10  Section
4.8 and 4.9 of this Exhibit shall not in any way restrict SCEK’s right as set forth in Section 14.2 of this
Agreement.

 

4.11  The Global Volume Discount set forth in this section 4 shall be
effective from the ****.

 

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

 

34

 

Exhibit  C

 

Manufacture by Alternate Source.

 

Publisher may
elect to be responsible for manufacturing its own Printed Materials (other than
any Artwork which may be placed directly upon the Format Discs, which Publisher will supply to the
Designated Manufacturing Facility for placement), at Publisher’s sole risk and
expense.  Prior to production of each
order, Publisher shall be required to supply SCEK with samples of any Printed
Materials not produced or supplied by a Designated Manufacturing Facility, at
no charge to SCEK or Designated Manufacturing Facility, for SCEK’s approval
with respect to the quality thereof. SCEK shall have the right to disapprove
any Printed Materials that do not comply with the Manufacturing Specifications.
Manufacturing Specifications for Printed Materials shall be comparable to
manufacturing specifications applied by SCEK to its own software products for
the System.  If Publisher elects to
supply its own Printed Materials, neither SCEK nor any Designated Manufacturing
Facility shall be responsible for any delays arising from use of Publisher’s
own Printed Materials.

 

35

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