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PLAYSTATION PORTABLE (?PSP?) LICENSED PSP PUBLISHER AGREEMENT

License Agreement

PLAYSTATION PORTABLE (?PSP?) LICENSED PSP PUBLISHER AGREEMENT | Document Parties: PSP LP | SONY COMPUTER ENTERTAINMENT AMERICA INC. You are currently viewing:
This License Agreement involves

PSP LP | SONY COMPUTER ENTERTAINMENT AMERICA INC.

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Title: PLAYSTATION PORTABLE (?PSP?) LICENSED PSP PUBLISHER AGREEMENT
Governing Law: California     Date: 5/3/2006
Industry: Software and Programming     Sector: Technology

PLAYSTATION PORTABLE (?PSP?) LICENSED PSP PUBLISHER AGREEMENT, Parties: psp lp , sony computer entertainment america inc.
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“[*]” denotes confidential information omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit 10.3

PLAYSTATION PORTABLE (“PSP”)

LICENSED PSP PUBLISHER AGREEMENT

This LICENSED PSP PUBLISHER AGREEMENT for the PlayStation Portable , (the “Agreement” or “PSP LPA”), entered into as of the 15th day of September, 2004 (the “Effective Date”), by and between SONY COMPUTER ENTERTAINMENT AMERICA INC., with offices at 919 E. Hillsdale Boulevard, Foster City, CA 94404 (hereinafter “SCEA”), and Midway Home Entertainment, with offices at 10110 Mesa Rim Road, San Diego, CA 92121 (hereinafter Publisher”).

WHEREAS , SCEA, its parent company, Sony Computer Entertainment Inc., and certain of their affiliates and companies within the group of companies of which any of them form a part (collectively referred to herein as “SCE” or alternatively “Sony”) are designing and developing, and licensing core components of, a portable, handheld computer entertainment system known as the PlayStation ® Portable or the “PSP” computer entertainment system (hereinafter referred to as the “PSP Player”).

WHEREAS , SCEA has the right to grant licenses to certain SCEA Intellectual Property Rights within its licensed territory (as defined below) in connection with the PSP Player.

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

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

 

 

1 . Definition of Terms.

      1.1 “Advertising Materials” means any advertising, marketing, merchandising, promotional, public relations (including press releases) and display materials relating to or concerning Licensed PSP Products or proposed Licensed PSP 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 PSP Player is referred to or used in any way, including but not limited to giving the PSP Player away as prizes in contests or sweepstakes and the public display of the PSP Player in product placement opportunities.

      1.2 “Affiliate of SCEA” means, as applicable, other regional SCE companies, including but not limited to, Sony Computer Entertainment Inc. in Japan, Sony Computer Entertainment Europe Ltd, in the United Kingdom, Sony Computer Entertainment Korea, Sony Computer Entertainment Hong Kong, Sony Computer Entertainment China, or such other Sony Computer Entertainment entity as may be established from time to time.

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

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

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

      1.6 “Guidelines” shall mean any guidelines of SCEA or an Affiliate of SCEA with respect to SCEA Intellectual Property Rights, which may be set forth in the PSP Sourcebook or in other documentation provided by SCEA or an Affiliate of SCEA to Publisher.

      1.7 “Legal Attribution Line” means the legal attribution line used in SCEA marketing or other materials, which shall be substantially similar to the following: “Product copyright and trademarks are the property of the respective publisher or their licensors”.

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

      1.9 “Licensed PSP Developer Agreement” or “PSP LDA” means a valid and current license agreement for the development of Licensed PSP Products for the PSP Player, fully executed between a Licensed PSP Developer and SCEA or an Affiliate of SCEA.

      1.10 “Licensed PSP Products” means the Executable Software (which may be combined with Executable Software of other Licensed PSP Publishers or Licensed


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PSP Developers), which shall consist of one interactive entertainment game product developed for the PSP Player per Unit, in final form developed exclusively for the PSP Player. Publisher shall have no right to package or bundle more than one product developed for the PSP Player in a single Unit unless separately agreed with SCEA. The term “Licensed PSP Products” expressly excludes traditional non-interactive entertainment products such as movies or music or other interactive entertainment products that are not complete games.

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

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

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

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

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

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

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

      1.18 “PSP Format Discs” means the discs formatted for use with the PSP Player which, for purposes of this

Agreement, are manufactured on behalf of Publisher and contain Licensed PSP Products or SCEA Demo Discs

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

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

      1.21 “Product Proposal’’ shall have the meaning set forth in Section 5.2.1 hereto.

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

      1.23 “PSP Development System Agreement” means an agreement entered Into between SCEA and a Licensed PSP Publisher, Licensed PSP Developer or other licensee for the sale or license of Development Tools.

      1.25 “PSP Development Tools” means the PSP development tools sold or licensed by SCEA to a Licensed PSP Publisher or Licensed PSP Developer for use in the development of Executable Software for the PSP Player.

      1.26 “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.

      1.27 “Purchase Order” means a written purchase order processed in accordance with the terms of Section 6.2.2 hereto, the Manufacturing Specifications or other terms provided separately by SCEA or a Designated Manufacturing Facility to Publisher.


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      1.28 “SCEA Demo Disc” means any demonstration disc developed and distributed by SCEA.

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

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

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

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

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

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

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

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

      1.37 “Wholesale Price” or “WSP” shall mean the greater of (i) the published price of the Licensed PSP Product offered to retailers by Publisher as evidenced by a sell sheet or price list issued by Publisher no later than [*          ] days before first commercial shipment of the Licensed PSP Product, or (ii) the actual price paid by retailers upon the first commercial shipment of a Licensed PSP Product without offsets, rebates or deductions from invoices of any kind.

2.   License.

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

      2.2 Separate PlayStation Agreements . Unless specifically set forth in this Agreement, all terms used herein are specific to the PSP Player and the third party licensing program related thereto and not to the original PlayStation, PlayStation 2 entertainment systems. or third party licensing program related thereto. Licenses relating to the original PlayStation or PlayStation 2 entertainment systems arc subject to separate agreements with SCEA, and any license of rights to Publisher under such separate agreements shall not confer on Publisher any rights under the PSP Player and vice versa.

3.   Development of Licensed PSP Products.

      3.1 Right to Develop. This PSP LPA grants Publisher the right to develop Licensed PSP Products and the right to purchase or license Development Tools, as is appropriate, from SCEA or its designated agent, pursuant to a separate Development System Agreement with SCEA.


*Information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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

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

4.   Limitations on Licenses; Reservation of Rights.

      4.1 Reverse Engineering Prohibited . Other than as expressly permitted by SCEA in writing, Publisher shall not directly or indirectly disassemble, decrypt, electronically scan, peel semiconductor components, decompile, or otherwise reverse engineer in any manner or attempt to reverse engineer or derive source code from, all or any portion of the SCE Materials, or permit, assist or encourage any third party to do so. Other than as expressly permitted by SCEA in writing, Publisher shall not use, modify, reproduce, sublicense, distribute, create derivative works from, or otherwise provide to third parties, the SCE Materials, in whole or in part, other than as expressly permitted by SCEA. SCEA shall permit Publisher to study the performance, design and operation of the Development Tools solely for the limited purposes of developing and testing Publisher’s software applications, or to build tools to assist Publisher with the development and testing of software applications for Licensed PSP 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 SCE Materials for copyright purposes, but may be heated as trade secrets of Publisher. In no event shall Publisher patent any tools created, developed or derived from SCE Materials. Publisher shall not make available to any third party any tools developed or derived from the study of the Development Tools without the express written permission of SCEA. Use of such tools shall he strictly limited to the creation or testing of Licensed PSP 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 to SCEA on any of Publisher’s products utilizing any SCE Materials or derivative works made therefrom. Moreover, Publisher shall bear all risks arising from incompatibility of its Licensed PSP Product and the PSP Player resulting from use of Publisher-created tools. The

burden of proof under this Section shall be on Publisher to show by clear and convincing evidence if a dispute arises, and SCEA reserves the right to require Publisher to furnish evidence satisfactory to SCEA that Publisher has complied with this Section.

      4.2 Reservation of SCEA’s Rights.

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

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


*Information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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      4.3 Reservation of Publisher’s Rights. Separate and apart from SCE Materials and other rights licensed to Publisher by SCEA hereunder, as between Publisher and SCEA, Publisher retains all rights, title and interest in and to the Product Software, and the Product Proposals and Product Information related thereto, including without limitation Publisher Intellectual Property Rights therein, 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 PSP 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 SCE Materials) for any hardware platform or service other than the PSP Player, or to use Printed Materials or Advertising Materials approved by SCEA as provided herein (provided that such Printed Materials and/or Advertising Materials do not contain any Licensed ‘Trademarks) as Publisher determines for such other platforms. SCEA shall not do or cause to be done any act or thing in any way impairing or tending to impair or dilute any of Publisher’s rights, title or interests hereunder. Notwithstanding the foregoing, Publisher shall not distribute or transmit Product Software which is intended to be used with the PSP Player via electronic means or any other means now known or hereafter devised, including without limitation, via wireless, cable, fiber optic means, telephone lines, microwave or radio waves, or a network of computers or other devices, except as otherwise permitted in Section 4.2.1 hereto.

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

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

      4.6 Covenant Not to Sue. Publisher, on behalf of itself and its representatives, affiliates, and any other person or entity acting on its behalf, hereby agrees not to file any

action against and covenants not to sue SCEA, any Affiliate of SCEA, or any of SCEA’s or its Affiliates’ subsidiaries on any and all claims, rights, charges, damages or causes of action arising from the infringement or alleged infringement of any U.S. or international patent owned by, assigned or exclusively licensed to Publisher that is classified in a field which would cover products sold by SCEA in the United States and that has an effective filing date during the term of this Agreement and before the expiration or termination of this Agreement plus [*          ]. This Section shall survive any termination or expiration of this Agreement with respect to the patents specified herein.

5. Quality Standards for the Licensed PSP Products.

      5.1 Quality Assurance Generally. The Licensed PSP Products (and all portions thereof) and Publisher’s use of any Licensed Trademarks shall be subject to SCEA’s prior written approval, which shall not be unreasonably withheld or delayed and which shall be within SCEA’s sole discretion as to acceptable standards of quality. SCEA shall have the right at any stage of the development of a Licensed PSP Product to review such Licensed PSP Product to ensure that it meets SCEA’s quality assurance standards. All Licensed PSP Products will be developed to utilize substantially the particular capabilities of the PSP Player’s proprietary hardware, software and graphics. Xo approval by SCEA of any element or stage of development of any Licensed PSP Product shall be deemed an approval of any other element or stage of such Licensed PSP Product, nor shall any such approval be deemed to constitute a waiver of any of SCEA’s rights under this Agreement. In addition, SCEA’s approval of any element or any stage of development of any Licensed PSP 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. All Product Proposal submissions shall be in conformance with the submissions provisions as published in the PSP SourceBook as published or amended. Publisher shall submit to SCEA for SCEA’s written approval or disapproval, which shall not be unreasonably withheld or delayed, a written concept document (the “Product Proposal”) prior to commencing development of a Licensed Product. Such Product Proposal must contain all information specified in the PSP SourceBook, as well as any additional information that SCEA may deem to be useful in evaluating the proposed Licensed PSP Product.

           5.2.2 Approval of Product Proposal. After SCEA’s review of Publisher’s Product Proposal, Publisher will receive written notice from SCEA of the status of the Product Proposal, which may range from “Pass” to


*Information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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“Review” to “Fail.” Such conditions shall have the meanings ascribed to them in the PSP SourceBook, and may be changed from time to time by SCEA. If a Product Proposal receives a “Fail”, then neither Publisher nor any other Licensed PSP Developer or Licensed PSP Publisher may re-submit such Product Proposal without significant, substantive revisions. SCEA shall have no obligation to approve any Product Proposal submitted by Publisher. Any development conducted by or at the direction of Publisher and any legal commitment relating to development work shall be at Publisher’s own financial and commercial risk. Publisher shall not construe approval of a Product Proposal as a commitment by SCEA to grant final approval to such Licensed PSP Product. Nothing herein shall restrict SCEA from commercially exploiting any coincidentally similar concept(s) and/or product(s), which have been independently developed by SCEA, an Affiliate of SCEA or any third party.

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

      5.3 Work-in-Progress .

           5.3.1 Submission and Review of Work-in-Progress. SCEA shall require Publisher to submit to SCEA work-in-progress on Licensed PSP Products at intervals to be defined in the PSP SourceBook, throughout the development of the Licensed PSP Product, or if requested by SCEA on written notice to Publisher, at any time during the development process. Publisher shall be responsible for submitting work-in-progress to SCEA in accordance with the product Review Process as determined by SCEA or otherwise set out in the PSP SourceBook. Failure to submit work-in-progress in accordance with any stage of the Review Process may, at SCEA’s discretion, result in revocation of approval of such Product Proposal.

           5.3.2 Approval of Work in Progress. SCEA shall have the right to approve, reject or require additional information with respect to each stage of the Review Process. Publisher shall make submission of the Licensed Product at first playable, pre-alpha, alpha, beta and final, or at such development stages to be more fully defined in the PSP SourceBook. SCEA shall approve each development stage of the Licensed Product or otherwise specify in writing the reasons for any rejection or request for

additional information and shall state what corrections or improvements are necessary to obtain approval. If any stage of the Review Process is not provided to SCEA or is not successfully met after a reasonable cure period agreed to between SCEA and Publisher, SCEA shall have the right to revoke the approval of Publisher’s Product Proposal.

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

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

      5.5 Printed Materials.

           5.5.1 Compliance with Guidelines. For each proposed Licensed PSP Product, Publisher shall be


*Information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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

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

      5.6 Advertising Materials .

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

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

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

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

      5.7 Rating Requirements. If required by SCEA or any governmental entity, Publisher shall submit each Licensed PSP Product to a consumer advisory ratings system designated by SCEA or such governmental entity for the purpose of obtaining rating code(s) for each Licensed PSP 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) shall be displayed on the Licensed PSP Product and in the associated Printed Materials and Advertising Materials, at Publisher’s cost and expense, in accordance with the PSP SourceBook or other documentation provided by SCEA to Publisher.

      5.8 Publisher’s Additional Quality Assurance Obligations. If at any time or times subsequent to the approval of Executable Software and Printed Materials, SCEA identifies any material defects (such materiality to be determined by SCEA in its sole discretion) with respect to the Licensed PSP Product, or in the event that SCEA identifies any improper use of its Licensed Trademarks or SCE Materials with respect to the Licensed PSP Product, or any such material defects or improper use are brought to the attention of SCEA, Publisher shall, at no cost to SCEA, promptly correct any such material defects, or improper use of Licensed Trademarks or SCE Materials, to SCEA’s commercially reasonable satisfaction, which may include, if necessary in SCEA’s judgment, the recall and re-release of such Licensed PSP Product. In the event any Units of


*Information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Licensed PSP 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 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 PSP Products, its obligation hereunder shall be to use its best efforts to arrange removal of such Licensed PSP Product from channels of distribution. Publisher shall provide all end-user support for the Licensed PSP Products and SCEA expressly disclaims any obligation to provide end-user support on Publisher’s Licensed PSP Products.

6. Manufacture of the Licensed PSP Products.

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

           6.1.1 Manufacture of PSP Format Discs.

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

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

any Designated Manufacturing Facility shall be liable for loss of or damage to any Master Discs or Executable Software.

           6.1.2 Manufacture of Printed Materials.

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

                6.1.2.2 Manufacture by Alternate Source . Subject to SCEA’s approval as provided in Section 5.5.2 hereto and in this Section, Publisher may elect to be responsible for manufacturing its own Printed Materials (other than any Artwork which may be placed directly upon the PlayStation Disc, which Publisher will supply to the Designated Manufacturing Facility for placement), at Publisher’s sole risk and expense. Prior to production of each order, Publisher shall be required to supply SCEA with samples of any Printed Materials not produced or supplied by a Designated Manufacturing Facility, at no charge to SCEA or Designated Manufacturing Facility, for SCEA’s approval with respect to the quality thereof. SCEA shall have the right to disapprove any Printed Materials that do not comply with the Manufacturing Specifications. Manufacturing Specifications for Printed Materials shall be comparable to manufacturing specifications applied by SCEA to its own software products for the PSP Player. If Publisher elects to supply its own Printed Materials, neither SCEA nor any Designated Manufacturing Facility shall be responsible for any delays arising from use of Publisher’s own Printed Materials.

           6.1.3 Manufacture of Packaging.

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

                6.1.3.2 Manufacture by Alternate Source. If SCEA elects to use standard, non-proprietary Packaging


*Information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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for the PSP Player, then Publisher may elect to be responsible for manufacturing its own Packaging (other than any proprietary labels and any portion of a container containing Licensed Trademarks, which Publisher must purchase from a Designated Manufacturing Facility). Publisher shall assume all responsibility for the creation of such Packaging at Publisher’s sole risk and expense. Publisher shall be responsible for encoding and printing proprietary edge labels provided by a Designated Manufacturing Facility with information reasonably specified by SCEA from time to time and will apply such labels to each Unit of the Licensed PSP Product as reasonably specified by SCEA. Prior to production of each order, Publisher shall be required to supply SCEA with samples of any Packaging not produced or supplied by a Designated Manufacturing Facility, at no charge to SCEA or Designated Manufacturing Facility, for SCEA’s approval with respect to the quality. SCEA shall have the right to disapprove any Packaging that docs not comply with the Manufacturing Specifications. Manufacturing Specifications for Packaging shall be comparable to manufacturing specifications applied by SCEA to its own software products for the PSP Player. If Publisher procures Packaging from an alternate source, then it must also procure assembly services from an alternate source. If Publisher elects to supply its own Packaging, neither SCEA nor any Designated Manufacturing Facility shall be responsible for any delays arising from use of Publisher’s own Packaging.

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

      6.2 Price. Payment and Terms.

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

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

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

                6.2.3.1 Credit Terms . SCEA may at its sole discretion extend credit terms and limits to Publisher. SCEA may also revoke such credit terms and limits at its sole discretion. If Publisher qualifies for credit terms, then orders will be invoiced upon shipment of Licensed PSP Products and each invoice will be payable within [*           ] days of the date of the invoice. Any overdue sum shall bear interest at the rate of [*           ] percent per month, or such lower rate as may be the maximum rate permitted under applicable law, from the date when payment first became due to and including the date of payment thereof. Publisher shall be additionally liable for all costs and expenses of collection, including without limitation, reasonable fees for attorneys and court costs.

                6.2.3.2 General Terms . No deduction may be made from remittances unless an approved credit memo has been issued by a Designated Manufacturing Facility. Neither SCEA nor a Designated Manufacturing Facility shall be responsible for shortage or breakage with respect to any order if component parts or assembly services are obtained from alternate sources. Each shipment to Publisher shall constitute a separate sale, whether whole or partial fulfillment of any order. Nothing in this Agreement shall excuse or be


 
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