PlayStation License Agreement

Confidential Portions Omitted



SONY PLAYSTATION(TM) LICENSE AGREEMENT



THIS LICENSE AGREEMENT is entered into as of the 16th day of February, 1995, by and between SONY COMPUTER ENTERTAINMENT OF AMERICA, a division of Sony Electronic Publishing Company, with offices at 711 Fifth Avenue, New York, New York 10022 (hereinafter " Sony"), and Interplay Productions, with offices at 17922 Fitch Avenue, Irvine, CA 92714 (hereinafter "Licensee").



WHEREAS, Sony and/or its affiliates have developed a CD-based interactive console for playing video games and for other entertainment purposes known as PlayStation(TM) (formerly known under the development code name "PS-X") (hereinafter referred to as the "Player") and also own or have the right to grant licenses to certain intellectual property rights used in connection with the Player.



WHEREAS, Licensee desires to be granted a non-exclusive license to develop and distribute Licensed Products (as defined below) pursuant to the terms and conditions set forth in this Agreement.



WHEREAS, Sony is willing, on the terms and subject to the conditions of this Agreement, to grant Licensee the desired non-exclusive license to develop and distribute Licensed Products, and desires to manufacture such Licensed Products for Licensee.



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, Licensee and Sony hereby agree as follows:



1. DEFINITION OF TERMS.



1.1 "Executable Software" means Licensee's object code software which includes the Licensee Software and any software (whether in object code or source code form) provided by Sony which is intended to be combined with Licensee Software for execution on a Player and has the ability to communicate with th e software resident in the Player.



1.2 "Intellectual Property Rights" means, by way of example but not by way of limitation, all current and future worldwide patents and other patent rights, copyrights, trademarks, service marks, trade names, mask wo rk 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, including without limitation all a pplications and registrations with respect thereto, and all renewals and extensions thereof.



1.3 "Licensed Territory" means the countries listed in Exhibit A, as may be in effect from time to time.



1.4 "Licensed Products" shall mean the Executable Software embodied on CD- ROM media.



1.5 "Licensed Trademarks" means the trademarks, service marks and logos designated by Sony. Nothing contained in this Agreement shall in any way grant Licensee the right to use the trademark "Sony" in any ma nner as a trademark, trade name, service mark or logo other than as expressly permitted by Sony. Sony may amend such Licensed Trademarks upon reasonable notice to Licensee.



1.6 "Licensee Software" means Licensee's application object code and data (including audio and video material) developed by Licensee in accordance with this Agreement, which, when linked to any software provided by Sony, create Executable Software.





1.7 "Packaging" means, with respect to each Licensed Product, the carton, containers, packaging and wrapping materials (but excluding instructional manuals, liners or other user information for such Licensed Product to be inserted in the jewel case ).



1.8 "Sony Materials" means any data, object code, source code, documentation, and hardware provided or supplied to Licensee by Sony, including, without limitation, any portion or portions of the development tools.



2. LICENSE GRANT.



Sony hereby grants to Licensee, and Licensee hereby accepts, for the term of this Agreement, within the Licensed Territory, under Sony's Intellectual Property Rights, including without limitation any relevant patents Sony may own or have acquired by license, a non-exclusive, nontransferable license, without the right to sublicense (except as specifically provided herein): (i) to use the object code version of any software supplied by Sony that is intended to be combined with Licensee Software and executed on a Player internally as may reasonably be necessary to develop Licensed Products; (ii) to reproduce and distribute executable files for execution on a Player incorporating such software in accordance with the provisions of this License Agreement, including w i thout limitation, Section 7; (iii) to market, distribute and sell such Licensed Products; (iv) to use the Licensed Trademarks in connection with the packaging, advertising and promotion of the Licensed Products; and (v) to sublicense to end users the righ t to use the Licensed Products for non- commercial purposes only and not for public performance.



3. DEVELOPMENT TOOLS.



After execution of this Agreement, Sony will provide to Licensee the hardware and software development tools which Sony deems to be necessary for development of the Executable Software pursuant to an agreement to be entered into separately between the parties hereto.



4. LIMITATIONS ON LICENSES; RESERVATION OF RIGHTS.



4.1 REVERSE ENGINEERING PROHIBITED. Licensee hereby agrees not to

------------------------------ disassemble, peel semiconductor components, decompile, or otherwise reverse engineer or attempt to reverse engineer or derive source code from, all or any portion of the So ny Materials (whether or not all or any portion of the Sony Materials are integrated with the Licensee Software), or permit or encourage any third party to do so, or use or acquire any materials from any third party who does so. Licensee shall not use, m o dify, reproduce, sublicense, distribute, create derivative works from, or otherwise provide to third parties, the Sony Materials, in whole or in part, other than as expressly permitted by this License Agreement. Licensee shall be required in all cases to pay royalties in accordance with Section 9 hereto to Sony on any of Licensee's products utilizing Sony Materials or which are in any way derived from the disassembly, decompilation, reverse engineering of, or use of source code derived from, the Sony Mate rials.



4.2 RESERVATION OF SONY'S RIGHTS. The licenses granted in this License

---------------------------- Agreement extend only to development of Licensed Products for use on the Player, in such form at as may be designated by Sony. Without limiting the generality of the foregoing, Licensee shall not have the right to 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 interconnected computers or other devices; provided, however, that Licensee may distribute the Licensed Soft w are in its discretion so long as it does not contain any Sony Materials or Licensed Trademarks. This License Agreement does not grant any right or license, under any Intellectual Property Rights of Sony 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 License Agreement or the conduct of the parties hereunder. Licensee shall not make use of any of the Sony Materials and Player or any Intellectual



Property Rights re lated to the Sony Materials and Player (or any portion thereof) except as authorized by and in compliance with the provisions of this License Agreement or as may be otherwise expressly authorized in writing by Sony. No right, license or privilege has bee n granted to Licensee 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.



4.3 RESERVATION OF LICENSEE'S RIGHTS. Licensee retains all rights, title

-------------------------------- and interest in and to the Licensee Software, including without limitation, Licensee's Intellectual Property Rights therein, and nothing in this Agreement shall b e construed to restrict the right of Licensee to develop products incorporating the Licensee Software (separate and apart from the Sony Materials) for any hardware platform or service other than the Player.



5. QUALITY STANDARDS FOR THE LICENSED PRODUCTS.



5.1 QUALITY ASSURANCE OF PRODUCT PROPOSAL. The Licensed Products,

------------------------------------- including, without limitation, the contents and title of ea ch of the Licensed Products, and/or Licensee's use of any of the Licensed Trademarks, shall be subject to Sony's prior written approval, which shall be within Sony's sole discretion as to acceptable standards of quality. Before Licensee commences program m ing of the Licensee Software for each of the Licensed Products, Licensee shall submit to Sony, for Sony's written approval or disapproval, which shall not be unreasonably withheld or delayed, a written proposal (the "Product Proposal") [*]. In the event t h at Sony rejects such Product Proposal, Sony shall have the right in its sole discretion to request Licensee to make revisions or modifications to such proposal, and any such changes shall be made at Licensee's cost. Licensee shall notify Sony promptly in w riting in the event of any material proposed change in any portion of the Product Proposal and shall, from time to time at the request of Sony for quality assurance purposes, submit work-in-progress on the Licensed Product during the development process, i n a medium designated by Sony, for Sony's approval. Sony agrees to be reasonable with respect to work-in-progress submissions. Sony shall have the right, from time-to-time with appropriate notice to Licensee, to limit the number of proposed Licensed Produ c ts that Licensee may submit to Sony for review and approval or disapproval, during any [*] period following the effective date of this Agreement. [*] Licensee agrees that all Licensed Products will be designed (if an original title for the Player) or modi fied (if a pre-existing title) to substantially utilize the particular capabilities of the Sony Materials and the Player, as may be described in the Product Proposal relating to that Licensed Product.



5.2 APPROVAL OF EXECUTABLE SOFTWARE. Following Sony's written approval of

------------------------------- the Product Proposal, Licensee shall on or before the date specified in the Product Proposal, deliver to Sony for its inspection and evaluation, a prototype of the Executable Software for t he proposed Licensed Product. Such prototype shall be in the format prescribed by Sony. Sony will evaluate such prototype Executable Software and notify Licensee in writing of its approval or disapproval of such Executable Software, which shall not be u n reasonably withheld or delayed. If such Executable Software is disapproved, Sony shall specify the reasons for such disapproval in writing and state what corrections and/or improvements are necessary. After making the necessary corrections and/or improv e ments, Licensee may submit a new prototype for approval or disapproval by Sony. No approval by Sony of any element of the Executable Software shall be deemed an approval of any other element of the Licensed Product, nor shall any such approval be deemed to constitute a waiver of any of Sony's rights under this Agreement.



____________ [*] Confidential Portions Omitted and Filed Separately with the Commission.





5.3 APPROVAL OF PACKAGING AND ARTWORK. For each proposed Licensed

------------- -------------------- Product, Licensee shall be responsible, at Licensee's expense, for developing all artwork and mechanicals ("Artwork") set forth on the Packaging, and all instructional manuals, liners and other user m aterials ("Inserts") inserted into the jewel box (Artwork and Inserts herein collectively referred to as "Printed Materials"). All Printed Materials shall comply with the requirements of the Sony Guidelines (hereinafter "Guidelines") to be provided to Lic e nsee subsequent to the execution of this License Agreement, and as may be amended from time to time by Sony. At the time prototype Executable Software for a proposed Licensed Product is submitted to Sony for inspection and evaluation, Licensee shall also d eliver to Sony, for review and evaluation, the proposed final Printed Materials for such proposed Licensed Product, and a form of limited warranty for the proposed Licensed Product. Licensee agrees that the quality of such Printed Materials shall be of th e same quality as that associated with high quality consumer products. Sony shall promptly evaluate any and all proposed Printed Materials submitted to Sony by Licensee, and shall use reasonable efforts to approve or disapprove any such submitted Printed M a terials [*]. If any of the Printed Materials are disapproved, Sony shall specify the reasons for such disapproval and state what corrections are necessary. After making the necessary corrections to the disapproved Printed Materials, Licensee may submit ne w proposed Printed Materials for approval by Sony. Sony shall not unreasonably withhold its approval of the proposed Printed Materials submitted for review by Licensee. No approval by Sony of any element of the Printed Materials shall be deemed an approval of any other element of the Licensed Product, nor shall any such approval be deemed to constitute a waiver of any of Sony's rights under this Agreement.



5.4 ADVERTISING MATERIALS. Pre-production samples of the advertising,

--------------- ------ merchandising, promotional, and display materials of or concerning the Licensed Products (collectively referred to hereinafter as the "Advertising Materials") shall be submitted by Licensee to Sony, free of cost, for Sony's evaluation and approval as to quality, style, appearance, usage of any of the Licensed Trademarks, and appropriate reference of the notices, prior to any actual production, use, or distribution of any such items by Licensee or in its b e half. No such proposed Advertising Materials shall be produced, used, or distributed directly or indirectly by Licensee without first obtaining the written approval of Sony. Sony shall promptly evaluate any and all Advertising Materials submitted to Sony b y Licensee, and shall use reasonable efforts to approve or disapprove any such submitted Advertising Materials [*]. Subject in each instance to the prior written approval of Sony, Licensee may use such textual and/or pictorial advertising matter (if any) a s may be created by Sony or in its behalf pertaining to the Sony Materials and/or to the Licensed Trademarks on such promotional and advertising materials as may, in Licensee's judgment, promote the sale of the Licensed Products within the Licensed Territ o ry. Sony shall have the right to use the Licensed Products in any advertising or promotion for Player at Sony's expense, subject to giving Licensee reasonable prior notice of such advertisement or promotion. Sony shall confer with Licensee regarding the t e xt of any such advertisement. If required by Sony and/or any governmental entity, Licensee shall include, at Licensee's cost and expense, the required consumer advisory rating code(s) on any and all marketing and advertising materials used in connection w ith the Licensed Product, which shall be procured in accordance with the provisions of Section 6 below.



6. LABELING REQUIREMENTS.



All Printed Materials for each unit of the Licensed Products shall have conspicuously, legibly and irremovably affixed thereto the notices specified in a template to be provided to Licensee subsequent to the execution of this License Agreement, which template may be amended from time to time by Sony during the term of this License Agreement. Licensee agrees that, if req u ired by Sony or any governmental entity, it shall submit each Licensed Product to a consumer advisory ratings system designated by Sony and/or such governmental entity for the purpose of obtaining rating code(s) for each Licensed Product. Any and all cost s and expenses incurred in connection with obtaining such rating code(s) shall be borne solely by Licensee. Any required consumer advisory rating code(s) procured hereby shall be displayed on the Licensed Product and the associated Printed Materials in ac cordance with the Guidelines, at Licensee's cost and expense.



____________ [*] Confidential Portions Omitted and Filed Separately with the Commission.





7. MANUFACTURE OF THE LICENSED PRODUCTS.



7.1 MANUFACTURE BY SONY.

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



7.1.1 APPOINTMENT OF SONY [ * ]. Licensee hereby appoints Sony,

-------------------------- and Sony hereby accepts such appointment, as the [*] manufacturer of all units of the License d Products. Licensee acknowledges and agrees that it shall purchase from Sony [*] percent of its requirements for finished units of the Licensed Products and Inserts for such Licensed Products, subject to Section 7.1.3 below, during the term of the Agreem e nt. Sony shall provide to Licensee written specifications setting forth terms relating to the manufacturing of Licensed Products and their component parts ("Specifications") subsequent to execution of this Agreement, which may be amended from time to time upon reasonable notice to Licensee. Sony shall have the right, but no obligation, to subcontract any phase of production of any or all of the Licensed Products or any part thereof.



7.1.2 CREATION OF MASTER CD-ROM. Following approval by Sony of

------------------------- each Licensed Product pursuant to Section 5.2, Licensee shall provide Sony with two (2) copies (in the form of CD write-once discs or such other form as may be requested by Sony in the Specifications) of the pre-production Executable Software for the original master CD-ROM (the "Master CD-ROM") from which all other copies of the Licensed Product are to be replicated. Promptly following such receipt of such samples, Sony shall create the Master CD-ROM from on e (1) such sample of the pre-production Executable Software in compliance with specifications effective at the time of replication. The price for mastering shall be based on the market price for mastering CD-ROM discs, plus costs necessary to protect Sony' s Intellectual Property Rights in the Sony Materials and the Player. Licensee shall be responsible for the costs, as set forth in the Specifications, of creating such Master CD-ROM. In order to insure against loss or damage to the copies of the Executable Software furnished to Sony, Licensee will retain duplicates of all such Executable Software. Sony shall not be liable for loss of or damage to any copies of the Executable Software.



7.1.3 DELIVERY OF PRINTED MATERIALS. Licensee shall deliver the

----------------------------- film for all Printed Materials to Sony or at Sony's option to Sony's designated manufacturing facility in accordance with the Specifications, at Licensee's sole risk and expense. In the event that Lice nsee elects to be responsible for manufacturing the Printed Materials, Licensee shall deliver such Printed Materials, in the minimum order quantities set forth in Section 7.2.2 below.



7.1.4 MANUFACTURE OF UNITS. Upon approval, pursuant to Section 5,

-------------------- of such pre-production samples of the Executable Software for the Master CD-ROM and the associated Artwork, Sony will, in accordance with the terms and conditions set forth in this Section 7, and at Licens ee's expense (a) manufacture units of the Licensed Product for Licensee; (b) manufacture Licensee's Packaging and Inserts (subject to Licensee's right to manufacture its own Printed Materials at Licensee's sole cost and expense); and (C) package the CD-RO Ms with the Printed Materials.



7.2 PRICE, PAYMENT AND TERMS.

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



7.2.1 PRICE. The applicable price for manufacture of any units of

----- the Licensed Products ordered hereunder shall be determined by Sony and provided to Licensee in the Specifications prior to manufacture of the Licensed Products. Such price shall be based on [*] (subject to Section 7.1.4 above), [*] provided by Sony [*]. Purchase price(s) shall be stated in United S t ates dollars and are subject to change by Sony at any time upon reasonable notice to Licensee; provided, however, the applicable price shall not be changed with respect to any units of the Licensed Products which are the subject of an effective purchase o rder but which have not yet been delivered by Sony at the designated F.O.B. point. Prices



____________ [*] Confidential Portions Omitted and Filed Separately with the Commission.



for the finished units of the Licensed Products are exclusive of any foreig n or U.S. federal, state, or local sales or value-added tax, use, excise, customs duties or other similar taxes or duties, which Sony may be required to collect or pay as a consequence of the sale or delivery of any units of the Licensed Products to Licen see. Licensee shall be solely responsible for the payment or reimbursement of any such taxes, fees, and other such charges or assessments applicable to the sale and/or purchase of any finished units of any of the Licensed Products.



7.2.2 ORDERS. Licensee shall issue to Sony written purchase

------ order(s) in accordance with the Specifications. Such orders shall reference this Agreement, give Licensee authorization number, specify quantities by Licensed Product, state reque sted delivery date and all packaging information and be submitted on or with an order form to be provided in the Specifications. Licensee acknowledges that Sony may impose lead times (a) with respect to initial orders, of [*] from the date on which Sony r e ceives all materials necessary to complete the manufacturing of Licensed Products pursuant to this Section 7 and the Specifications referred to herein, and (b) with respect to reorders, [*] provided that Sony has in inventory additional Printed Materials i n anticipation of reorders as set forth in this Section. All purchase orders shall be subject to acceptance by Sony. Licensee shall issue to Sony, for each of the Licensed Products approved by Sony pursuant to Section 5.1, a non- cancelable Purchase Order for at least [*] units of such Licensed Product. In the event that Sony manufactures the Printed Materials for the Licensee pursuant to Section 7.1.3 above, Licensee may, at Licensee's option, allow Sony to purchase an additional 20% of such Printed Mater i als at Licensee's expense in anticipation of reorders. Licensee agrees that such Printed Materials will be stored by Sony for a period of no more than ninety (90) days. Licensee may order additional units of any of such Licensed Products in the minimum re o rder quantity of [*] units per order, provided that reorder quantities may be less than [*] units per order (but in no event less than [*] units per order), in Sony's sole discretion, in the event that either (i) Sony has additional quantities of Printed M aterials in stock with respect to any such Licensed Product, or (ii) Licensee agrees to provide its own Printed Materials in accordance with Section 7.1.3 above. Licensee shall have no right to cancel or reschedule any Purchase Order (or any portion there of) for any of the Licensed Products unless the parties shall first have reached mutual agreement as to Licensee's financial liability with respect to any desired cancellation or rescheduling of any such Purchase Order (or any portion thereof).



7.2.3 PAYMENT TERMS. Orders will be invoiced upon shipment, and

------------- will include royalties payable pursuant to Section 9 hereto. Each invoice will be paid within [*] days of the date of the invoice. No other deduction may b e made from remittances unless an approved credit memo has been issued by Sony. No claim for credit due to shortage or breakage will be allowed unless it is made within seven (7) days from the date of shipment. Each shipment of Licensed Products to Licens e e shall constitute a separate sale obligating Licensee to pay therefore, whether said shipment be whole or partial fulfillment of any order. All sums owed or otherwise payable to Sony under this Section 7 and under Section 9 hereto shall bear interest at t he rate of one and one-half (1-1/2%) percent per month, or such lower rate as may be the maximum rate permitted under applicable law, from the date upon which payment of the same shall first become due up to and including the date of payment thereof wheth e r before or after judgment. Licensee shall be additionally liable for all of Sony's costs and expenses of collection, including, without limitation, reasonable fees for attorneys and court costs. Notwithstanding the foregoing, such specified rate of inter est shall not excuse or be construed as a waiver of Licensee's obligation to timely provide any and all payments owed to Sony hereunder.



7.3 DELIVERY OF LICENSED PRODUCTS. Sony shall have no obligation to store

----------------------------- completed units of Licensed Products. Delivery of Licensed Products shall be in accordance with the Specifications. Title, risk of loss, or damage in transit to any and all Licensed Products manufactured by Sony p ursuant to Licensee's orders shall vest in Licensee immediately upon delivery to the carrier.



____________ [*] Confidential Portions Omitted and Filed Separately with the Commission.





7.4 TECHNOLOGY EXCHANGE AND QUALITY ASSURANCE. There will be no

----------------------------------------- technology exchange between Sony and Licensee under this Agreement. Due to the proprietary nature of the mastering process, Sony will not under any circumstances release any ma ster discs or other in-process materials to the Licensee. All such physical master discs, stampers, etc. shall be and remain the sole property of Sony.



7.5 INSPECTION AND ACCEPTANCE. Licensee may inspect and test any units of

-------------- ----------- the Licensed Products at Licensee's receiving destination. Any finished units of the Licensed Products which fail to conform to the Specifications and/or any descriptions contained in this Agreement may be rejected by Licensee by providing wr i tten notice thereof to Sony within thirty (30) days of receipt of such units of the Licensed Products at Licensee's receiving destination. In such event, the provisions of Section 11.4 regarding Sony's warranty of the units shall apply with respect to an y such rejected units of the Licensed Products. Subject to the provisions of Section 11.4.1 hereto, if Licensee fails to properly reject any units of the Licensed Products within such thirty (30) day period, such Licensed Product units shall be deemed acce pted by Licensee and may not be subsequently rejected.



8. MARKETING AND DISTRIBUTION.



In accordance with the provisions of this License Agreement, Licensee shall, at no expense to Sony, diligently market, sell and distribute the Licensed Products, and shall use its reasonable best efforts to stimulate demand for such Licensed Products in the Licensed Territory and to supply any resulting demand. Licensee shall use its reasonable best efforts to protect the Licensed Products from and against illega l reproduction and/or copying by end users or by any other persons or entities. Such methods of protection may include, without limitation, markings or insignia providing identif ...