-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V+/S2sVnU4QuEpXyrKw2BBqZXiPmkmq5Dnxe4teMIIYxgMWxbeNQNjEt/dXfs97W U4DHG/ywNpaLNh0JvZPVcQ== 0001011438-02-000392.txt : 20020522 0001011438-02-000392.hdr.sgml : 20020522 20020522153210 ACCESSION NUMBER: 0001011438-02-000392 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20020522 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERPLAY ENTERTAINMENT CORP CENTRAL INDEX KEY: 0001057232 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 330102707 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24363 FILM NUMBER: 02659863 BUSINESS ADDRESS: STREET 1: 16815 VON KARMAN AVE CITY: IRVINE STATE: CA ZIP: 92606 BUSINESS PHONE: 9495536655 MAIL ADDRESS: STREET 1: 16815 VON KARMAN AVE CITY: IRVINE STATE: CA ZIP: 92606 10-K/A 1 form10-ka.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 4 FORM 10-K/A [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 or [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 0-24363 INTERPLAY ENTERTAINMENT CORP. (Exact name of the registrant as specified in its charter) DELAWARE 33-0102707 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 16815 VON KARMAN AVENUE, IRVINE, CALIFORNIA 92606 (Address of principal executive offices) (949) 553-6655 (Registrant's telephone number, including area code) Securities registered pursuant of Section 12 (b) of the Act: None Securities registered pursuant of Section 12 (g) of the Act: COMMON STOCK, $0.001 PAR VALUE Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of April 15, 2002, 93,060,857 shares of Common Stock of the Registrant were issued and outstanding and the aggregate market value of voting common stock held by non-affiliates was $3,032,659. DOCUMENTS INCORPORATED BY REFERENCE None. AMENDMENT NO. 4 TO THE ANNUAL REPORT ON FORM 10-K FILED BY INTERPLAY ENTERTAINMENT CORP. ON APRIL 17, 2001, AS AMENDED ON APRIL 30, 2001, AUGUST 31, 2001 AND NOVEMBER 29, 2001 The following Items amend the Annual Report on Form 10-K filed by Interplay Entertainment Corp. (the "Company") on April 17, 2001, as amended by Form 10-K/A on April 30, 2001, August 31, 2001 and November 29, 2001 (the "Form 10-K"), as permitted by rules and regulations promulgated by the Securities Exchange Commission. That Form 10-K is hereby amended and restated to insert those Items as set forth herein. All capitalized terms used herein but not defined shall have the meanings ascribed to them in the Form 10-K. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Financial Statements The list of financial statements contained in the accompanying Index to Consolidated Financial Statements covered by the Report of Independent Public Accountants is herein incorporated by reference.* (2) Financial Statement Schedules The list of financial statement schedules contained in the accompanying Index to Consolidated Financial Statements covered by the Report of Independent Public Accountants is herein incorporated by reference.* All other schedules are omitted because they are not applicable or the required information is included in the Consolidated Financial Statements or the Notes thereto. (3) Exhibits The list of exhibits on the accompanying Exhibit Index is herein incorporated by reference. (b) Reports on Form 8-K. None. - ------------------ * Previously filed with Form 10-K Page 2 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Irvine, State of California, on the 22nd day of May, 2002. INTERPLAY ENTERTAINMENT CORP. By: /S/ HERVE CAEN ----------------------------------- Herve Caen, Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Amendment No. 4 to Annual Report on Form 10-K/A has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE /S/ HERVE CAEN President, Interim Chief Executive May 22, 2002 - ----------------------------- Officer and Director (Principal Herve Caen Executive Officer) * Chief Financial Officer May 22, 2002 - ----------------------------- (Principal Financial Officer and Jeffrey Gonzalez Principal Accounting Officer) Director May 22, 2002 - ----------------------------- Eric Caen * Director May 22, 2002 - ----------------------------- Nathan Peck Director May 22, 2002 - ----------------------------- Michel Henri Vulpillat * Director May 22, 2002 - ----------------------------- Michel Welter Director May 22, 2002 - ----------------------------- Parker Jones * Director May 22, 2002 - ----------------------------- Maren Stenseth * By: /S/ HERVE CAEN ----------------------- Herve Caen Attorney in Fact
Page 3 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 2.1 Agreement and Plan of Reorganization and Merger, dated May 29, 1998, between the Company and Interplay Productions. (incorporated herein by reference to Exhibit 2.1 to the Company's Registration Statement on Form S-1, No. 333-48473 (the "Form S-1")) 3.1 Amended and Restated Certificate of Incorporation of the Company. (incorporated herein by reference to Exhibit 3.1 to the Form S-1) 3.2 Certificate of Designation of Preferences of Series A Preferred Stock, as filed with the Delaware Secretary of State on April 14, 2000. (incorporated herein by reference to Exhibit 10.32 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 3.3 Amended and Restated Bylaws of the Company. (incorporated herein by reference to Exhibit 3.2 to the Form S-1) 4.1 Specimen form of stock certificate for Common Stock. (incorporated herein by reference to Exhibit 4.1 to the Form S-1) 4.2 Shareholders' Agreement among MCA Inc., the Company, and Brian Fargo, dated March 30, 1994, as amended. (incorporated herein by reference to Exhibit 4.2 to the Form S-1) 4.3 Investors' Rights Agreement dated October 10, 1996, as amended, among the Company and holders of its Subordinated Secured Promissory Notes and Warrants to purchase Common Stock. (incorporated herein by reference to Exhibit 4.3 to the Form S-1) 10.1 Amended and Restated 1997 Stock Incentive Plan (the "1997 Plan"). (incorporated herein by reference to Exhibit 10.1 to the Form S-1) 10.2 Form of Stock Option Agreement pertaining to the 1997 Plan. (incorporated herein by reference to Exhibit 10.2 to the Form S-1) 10.3 Form of Restricted Stock Purchase Agreement pertaining to the 1997 Plan. (incorporated herein by reference to Exhibit 10.3 to the Form S-1) 10.4 Incentive Stock Option and Nonqualified Stock Option Plan--1994, as amended (the "1994 Plan"). (incorporated herein by reference to Exhibit 10.4 to the Form S-1) 10.5 Form of Nonqualified Stock Option Agreement pertaining to the 1994 Plan. (incorporated herein by reference to Exhibit 10.5 to the Form S-1) 10.6 Incentive Stock Option, Nonqualified Stock Option and Restricted Stock Purchase Plan--1991, as amended (the "1991 Plan"). (incorporated herein by reference to Exhibit 10.6 to the Form S-1) 10.7 Form of Incentive Stock Option Agreement pertaining to the 1991 Plan. (incorporated herein by reference to Exhibit 10.7 to the Form S-1) 10.8 Form of Nonqualified Stock Option Agreement pertaining to the 1991 Plan. (incorporated herein by reference to Exhibit 10.8 to the Form S-1) 10.9 Employee Stock Purchase Plan. (incorporated herein by reference to Exhibit 10.10 to the Form S-1) 10.10 Form of Indemnification Agreement for Officers and Directors of the Company. (incorporated herein by reference to Exhibit 10.11 to the Form S-1) 10.11 Von Karman Corporate Center Office Building Lease between the Company and Aetna Life Insurance Company of Illinois, dated September 8, 1995, together with amendments thereto. (incorporated herein by reference to Exhibit 10.14 to the Form S-1) 10.12 Loan and Security Agreement among Greyrock Business Credit, a Division of NationsCredit Commercial Corporation ("Greyrock"), the Company, and Interplay OEM, Inc. ("Interplay OEM"), dated June 16, 1997, as amended, with Schedules. (incorporated herein by reference to Exhibit 10.15 to the Form S-1) 10.13 Letter of Credit Agreement among Greyrock, the Company and Interplay OEM, dated September 10, 1997. (incorporated herein by reference to Exhibit 10.18 to the Form S-1) 10.14 Letter of Credit Agreement among Greyrock, the Company and Interplay OEM, dated September 24, 1997. (incorporated herein by reference to Exhibit 10.19 to the Form S-1) 10.15 Master Equipment Lease between Brentwood Credit Corporation and the Company, dated March 28, 1996, with Schedules. (incorporated herein by reference to Exhibit 10.20 to the Form S-1) 10.16 Master Equipment Lease Agreement between General Electric Capital Computer Leasing Corporation and the Company, dated December 14, 1994, as amended, with Schedules. (incorporated herein by reference to Exhibit 10.22 to the Form S-1) 10.17 Confidential License Agreement for Nintendo 64 Video Game System, between the Company and Nintendo of America, Inc., dated October 7, 1997. (incorporated herein by reference to Exhibit 10.23 to the Form S-1) * Page 1 EXHIBIT NO. DESCRIPTION 10.18 PlayStation License Agreement, between Sony Computer Entertainment of America and the Company, dated February 16, 1995. (incorporated herein by reference to Exhibit 10.24 to the Form S-1) * 10.19 Master Merchandising License Agreement between Paramount Pictures Corporation and the Company, dated as of June 16, 1992. (incorporated herein by reference to Exhibit 10.25 to the Form S-1) * 10.20 Heads of Agreement concerning Sales and Distribution between the Company and Activision, Inc., dated November 19, 1998, as amended (incorporated herein by reference to Exhibit 10.23 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.) * 10.21 Stock Purchase Agreement between the Company and Titus Interactive SA, dated March 18, 1999 (incorporated herein by reference to Exhibit 10.24 to Registrant's Annual Report on Form 10-K for the year ended December 1998.) 10.22 International Distribution Agreement between the Company and Virgin Interactive Entertainment Limited, dated February 10, 1999 (incorporated herein by reference to Exhibit 10.26 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.) * 10.23 Termination Agreement among the Company, Virgin Interactive Entertainment Limited, VIE Acquisition Group, LLC and VIE Acquisition Holdings, LLC, dated February 10, 1999 (incorporated herein by reference to Exhibit 10.27 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.) * 10.24 Amendment to Loan Documents among the Company, Interplay OEM, Inc. and Greyrock, dated March 18, 1999 (incorporated herein by reference to Exhibit 10.28 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.) 10.25 Fifth Amendment to Lease for Von Karman Corporate Center Office Building between the Company and Arden Realty Finance IV, L.L.C., dated December 4, 1998 (incorporated herein by reference to Exhibit 10.29 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.) 10.26 Stock Purchase Agreement dated July 20, 1999, by and among the Company, Titus Interactive S.A., and Brian Fargo (incorporated herein by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.) 10.27 Exchange Agreement dated July 20, 1999, by and among Titus Interactive S.A., Brian Fargo, Herve Caen and Eric Caen (incorporated herein by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.) 10.28 Employment Agreement between the Company and Herve Caen dated November 9, 1999 (incorporated herein by reference to Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.) 10.29 Employment Agreement between the Company and Brian Fargo dated November 9, 1999 (incorporated herein by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.) 10.30 Stockholder Agreement among the Company, Titus Interactive S.A. and Brian Fargo dated November 9, 1999 (incorporated herein by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.) 10.31 Stock Purchase Agreement between the Company and Titus Interactive S.A., dated April 14, 2000. (incorporated herein by reference to Exhibit 10.31 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 10.32 Warrant (350,000 shares) for Common Stock between the Company and Titus Interactive S.A., dated April 14, 2000. (incorporated herein by reference to Exhibit 10.33 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 10.33 Warrant (50,000 shares) for Common Stock between the Company and Titus Interactive S.A., dated April 14, 2000. (incorporated herein by reference to Exhibit 10.34 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 10.34 Warrant (100,000 shares) for Common Stock between the Company and Titus Interactive S.A., dated April 14, 2000. (incorporated herein by reference to Exhibit 10.35 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 10.35 Amendment to Loan Documents among the Company, Interplay OEM, Inc. and Greyrock, dated April 14, 2000. (incorporated herein by reference to Exhibit 10.36 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) Page 2 EXHIBIT NO. DESCRIPTION 10.36 Revolving Note between the Company and Titus Interactive S.A., dated April 14, 2000. (incorporated herein by reference to Exhibit 10.37 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 10.37 Reimbursement and Security Agreement between the Company and Titus Interactive S.A., dated April 14, 2000. (incorporated herein by reference to Exhibit 10.38 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 10.38 Amendment Number 1 to International Distribution Agreement between the Company and Virgin Interactive Entertainment Limited, dated July 1, 1999. (incorporated herein by reference to Exhibit 10.39 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.) 10.39 XBOX Publisher License Agreement between the Company and Microsoft Corporation, dated October 12, 2000. (incorporated herein by reference to Exhibit 10.39 to Registrant's Amendment No.1 to its Annual Report on Form 10-K/A, filed April 30, 2001.) 10.40 Joint Venture Agreement between the Company and Brian Fargo, dated April 3, 2000. (incorporated herein by reference to Exhibit 10.40 to Registrant's Amendment No. 2 to its Annual Report on Form 10-K/A, filed August 31, 2001.) 10.41 Agreement among the Company, Brian Fargo, Titus Interactive, S.A. and Herve Caen, dated May 15, 2001. (incorporated herein by reference to Exhibit 10.41 to Registrant's Amendment No. 2 to its Annual Report on Form 10-K/A, filed August 31, 2001.) 10.42 Amendment to International Distribution Agreement between the Company and Virgin Interactive Entertainment Limited, dated April 12, 2001. * 10.43 Retail License Agreement between the Company and Warner Bros. Consumer Products, a division of Time Warner Entertainment Company, L.P., dated December 18, 2000. * 10.44 Playstation(R) CD-ROM/DVD-ROM Licensed Publisher Agreement between the Company and Sony Computer Entertainment America, Inc., dated April 1, 2001. * 10.45 Computer Game License Agreement between the Company and TSR, Inc. dated August 8, 1994. * 10.46 First Amendment to Computer Game License Agreement between the Company and TSR, Inc., dated August 8, 1994. * 10.47 Second Amendment to License Agreement between the Company and TSR, Inc., dated March 8, 1998. * 21.1 Subsidiaries of the Company. (incorporated herein by reference to Exhibit 21.1. to the Form S-1) 23.1 Consent of Arthur Andersen LLP. 24.1 Power of Attorney (included as page 40 to the Registrant's Form 10-K). - -------------------- * Certain portions of this agreement have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for an order granting confidential treatment pursuant to Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. Page 3 EX-10 3 exhibit10-42.txt EXHIBIT 10.42 AMENDMENT TO INTERNATIONAL DISTRIBUTION AGREEMENT This Amendment to International Distribution Agreement (this "AGREEMENT"), is entered into as of April 12, 2001, by and between INTERPLAY ENTERTAINMENT CORP., a Delaware corporation whose principal place of business is at 16815 Von Karman Avenue, Irvine, California 92606 (hereinafter "INTERPLAY"), and VIRGIN INTERACTIVE ENTERTAINMENT LIMITED, a corporation formed under the laws of England and Wales whose principal place of business is at 74A Charlotte St., London, England, W1P 1LR (hereinafter "VIRGIN"), with respect to the following recitals: RECITALS A. Interplay and Virgin are parties to that certain Settlement and Release Agreement, dated as of the date hereof (the "SETTLEMENT AGREEMENT"), which Settlement Agreement provides for the execution and delivery of this Agreement as a condition precedent to the consummation of the parties' respective obligations thereunder. B. Pursuant to SECTION 14(B) of that certain International Distribution Agreement, entered into effective February 10, 1999 (the "ORIGINAL AGREEMENT"), between Virgin and Interplay, Virgin and Interplay are amending the Original Agreement as set forth herein. All capitalized terms used in this Agreement and not defined herein shall have the meanings given such terms in the Original Agreement. C. The parties intend this Agreement to be an amendment, effective as of the date first set forth above, of the Original Agreement, and not a novation. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreements and promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. PAYMENTS. Subject to SECTION 2 below, Exhibit B to the Original Agreement is hereby amended as follows: 1.1 THE MINIMUM MONTHLY OVERHEAD FEE. Section 3 of Exhibit B of the Original Agreement is hereby amended as follows: 1.1.1 Interplay shall pay to Virgin an aggregate Minimum Monthly Overhead Fee of [*] for the period from [*] through [*], which amount shall be paid by Interplay to Virgin as follows: (a) [*] - ---------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. (b) [*] 1.1.2 Notwithstanding SECTION 1.1.1 to the contrary, if the Original Agreement is terminated by either party for any reason, including as of a result of breach by either party, all unpaid amounts provided for in SECTION 1.1.1, in addition to any other amounts that may be payable by Interplay as a result of such termination, shall be immediately due and payable, without notice, as of the date of such termination. 1.1.3 For the period from [*] through termination or expiration of the Original Agreement, no Minimum Monthly Overhead Fee shall be payable by Interplay to Virgin, and Section 3 of Exhibit B of the Original Agreement shall cease to have any further force or effect. 1.2 RIGHT OF OFFSET. Each of Virgin and Interplay shall have the right to set off against any amounts payable by one such party (the "FIRST PARTY") to the other such party (the "SECOND PARTY") under the Original Agreement all or any portion of any amounts then payable by the Second Party to the First Party under the Original Agreement, as amended by this Agreement, including, without limitation, the Minimum Monthly Overhead Fee. 1.3 ADJUSTMENT OF THE MINIMUM MONTHLY OVERHEAD FEE. Section 4 of Exhibit B of the Original Agreement is hereby deleted in its entirety. The parties agree that any prior purported amendments to the Distribution Agreement are void. 1.4 MINIMUM DISTRIBUTION FEE. Section 5 of Exhibit B of the Original Agreement is hereby deleted in its entirety. 2. MARKETING. The Original Agreement, including, without limitation, Section 4 and Sections 5(b), (c), (d) and (j), is hereby amended to the maximum extent necessary to provide that from and after July 1, 2001, Interplay shall be solely responsible for and shall provide all marketing, advertising, promotion, localization and testing (of packaging, Products and advertising) of the Products in the Territory. 3. ADDITIONAL AUDIT RIGHTS. In addition to the rights and obligations of the parties provided for in Section 6(c) of the Original Agreement, a certified public accountant (or the European equivalent thereof) appointed by Interplay may, at Interplay's expense and to Interplay's satisfaction, examine Virgin's books and records for the purpose of verifying the accuracy of any charges made by Virgin to Interplay for reimbursement of expenses incurred by Virgin on Interplay's behalf. These additional audit rights shall be subject to the other terms and conditions of Section 6(c). Additionally, Section 6(c) is hereby amended to provide that, if Virgin disagrees with the results of any audit conducted pursuant to Section 6(c), Interplay shall have the right to obtain copies of all relevant backup documents prepared or reviewed by the auditors in connection with the audit only to the extent such documents relate to the Products. Additionally, the parties agree to cooperate in any audit conducted pursuant to Section 6(c). - ---------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. 4. RETURNS; ETC. Sections 5(e) and (f) of the Original Agreement are hereby amended to provide that Virgin shall not have the right to retain from the payments due to Interplay under the Original Agreement any reserve against Returns. Interplay shall, however, be responsible for actual Returns, which amounts shall be determined on a monthly basis during the Term and credited against any payments thereafter due to Interplay under the Original Agreement if during the term of this Agreement, and paid by Interplay to Virgin upon demand if such amount exists at or after termination of the Original Agreement. 5. PAYMENTS BY THE PARTIES. 5.1 BY VIRGIN. Section 1 of Exhibit B to the Original Agreement is hereby amended to provide that all payments to be made by Virgin to Interplay pursuant to Section 1 of Exhibit B shall be paid within [*] after the end of the month in which the Products with respect to which such payments relate are invoiced by Virgin to its customers. If Virgin fails to pay any amounts due under this Section 1 when due, Interplay may withhold such amounts from payments due under Section 2 of Exhibit B for the duration of such non-payment by Virgin. 5.2 BY INTERPLAY. Section 2 of Exhibit B to the Original Agreement is hereby amended to provide that, in lieu of Virgin deducting the amounts provided for in such section from the amounts payable by Virgin to Interplay under Section 1 of Exhibit B, Interplay shall pay such amounts to Virgin within [*] after the date of the invoice for such obligation. Notwithstanding the immediately preceding sentence to the contrary, if Virgin is required to pay any amount set forth in Section 2 of Exhibit B before the [*] period referred to above, Interplay shall pay Virgin such amount on or before the day such invoice is payable by Virgin. If Interplay fails to pay any amounts when due, Virgin may withhold such amounts from the payments due Interplay under Section 1 of Exhibit B for the duration of such non-payment by Interplay. 6. CONSOLE PRODUCTS. Section 5(k)(C) of the Original Agreement is hereby amended to provide that, with respect to Products on video game console systems (e.g., PlayStation, N64, Dreamcast), Interplay shall be responsible for ordering the Products from the system licensor and the payment of the cost of goods and royalties to such system licensors. Interplay shall not have any right to utilize Virgin's line of credit with any of the system licensors to facilitate ordering Products from such system licensors. If requested by Interplay, Virgin shall have the right, at its option (and without the obligation to do so), to order Products on video game console systems from the system licensors and pay any amounts to the system licensors agreed to by Interplay and Virgin, and otherwise arrange for the production and delivery of such Products to Virgin's facilities. If Virgin orders such Products at Interplay's request, Virgin shall have the right to set off against any amounts due Interplay by Virgin the full cost and expense incurred by Virgin in connection with the order by Virgin of such console Products, including, without limitation, any cost of goods and royalties paid to such system licensors and all shipping costs, taxes and other amounts incurred in the delivery of such Products to Virgin. - ---------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. 7. MISCELLANEOUS. Except as expressly set forth in this Agreement, all of the terms of the Original Agreement shall remain in full force and effect. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made in, and to be performed within, said state. 8. CONDITION TO EFFECTIVENESS. This Agreement shall become effective upon, and not before the "Closing" (as defined in the Settlement Agreement.), and if such Closing does not occur on or prior to April 30, 2001, this Agreement shall be void and of no effect ab initio. - ---------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. IN WITNESS WHEREOF, this Agreement has been made and entered into as of the day and year first set forth above. INTERPLAY ENTERTAINMENT CORP., a Delaware corporation By: /S/ BRIAN FARGO ------------------------------------- Brian Fargo Its: Chief Executive Officer VIRGIN INTERACTIVE ENTERTAINMENT LIMITED, a corporation formed under the laws of England and Wales By: /S/ ------------------------------------- Its: ------------------------------------- - ---------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. EX-10 4 exhibit10-43.txt EXHIBIT 10.43 RETAIL LICENSE WARNER BROS. CONSUMER PRODUCTS #12420-MATR LICENSE AGREEMENT made December 18, 2000, by and between Warner Bros. Consumer Products, a division of Time Warner Entertainment Company, L.P., whose address is 4000 Warner Blvd., Burbank, CA 91522 (hereinafter referred to as "LICENSOR") and Interplay Entertainment Corp., a Delaware corporation, whose address is 16815 Von Karman Avenue, Irvine, CA 92606, Attention: Brian Fargo (hereinafter referred to as "LICENSEE"). RECITALS A. Licensor is in the business of licensing certain entertainment and other properties. Licensee is in the business of developing, designing, manufacturing and selling interactive game products. Licensee presently has a written agreement (the "Shiny Agreement") with Shiny Entertainment ("Shiny") for, among other things, the exclusive right to the game development and design services of David Perry ("Perry"). Licensor desires to use the services of Shiny and Perry in the development of the prototypes for the Licensed Products (defined below). WITNESSETH: The parties hereto hereby agree as follows: 1. DEFINITIONS. As used in this Agreement the following terms shall have the following respective meanings: (a) "ADVERTISING AND PROMOTION COMMITMENT": Licensee shall spend certain minimum amounts on advertising, marketing, promotion and brand building of the Licensed Products (as defined below). Licensee shall submit to Licensor, as part of Licensee's initial Business Plan (as defined below), a proposed Advertising and Promotion Commitment on a country-by-country and year-by-year basis. Such Advertising and Promotion Commitment shall include, without limitation: (i) advertising and promotional spending for the Licensed Products for the Term of this Agreement, in an aggregate amount of not less than [*] of gross sales of the Licensed Products, provided however, that such advertising and promotional spend shall in no event be less than [*] and shall not be required to exceed [*]. (ii) approximately [*] of the overall advertising and promotional spend set forth in subparagraph (i) above shall be spent in connection with the initial launch of the first Licensed Products (i.e., during the period commencing nine (9) months before and ending nine (9) months after such launch); provided, however, that the amount spent on such initial launch shall be not less than [*] and shall not be required to be more than [*]; - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 1 (iii) if Licensee conducts any online advertising or promotion, a minimum of [*] of Licensee's online advertising and promotional spend shall be used to purchase advertising with Warner Bros. Online in connection with advertising on the wb.com/matrix.com website. For purposes of this paragraph, the Advertising and Promotion Commitment shall include amounts spent on the following: television, radio, print, direct mail and online media buys; in-store point of purchase materials; and such other consumer oriented advertising and promotion for the Licensed Products as may be approved by Licensor after review of Licensee's marketing plan. The Advertising and Promotion Commitment specifically excludes commercial production and other advertising production costs, agency fees or commissions, and, except as otherwise specifically approved by Licensor in advance in writing, trade oriented marketing costs. Licensee shall, no later than [*] days following the end of each calendar quarter during the Term, submit a statement evidencing fulfillment of the Advertising and Promotion Commitment for the immediately preceding calendar quarter. (b) "BUSINESS PLAN": Licensee shall, no later than [*], submit to Licensor an outline of Licensee's business plan (the "Outline") for Licensee's activities during the Term in connection with this Agreement. On or before execution of this Agreement, Licensee shall submit to Licensor a more detailed business plan based on the Outline (the "Business Plan"). Both the Outline and the Business Plan are subject to the approval of Licensor in its sole discretion. The Business Plan shall, without limitation, address the following areas: (i) The channels of distribution for each country within the Territory (as defined below); (ii) Projected sales of the Licensed Products (in units), by Platform, categorized by Licensed Product, by Platform, by channel of distribution, and by country within the Territory; (iii) Projected sales price of each Licensed Product for each country within the Territory (For countries outside of the United States, such sales price shall be provided in both US Dollars and in local currency); (iv) Projected revenue forecast in US Dollars of each Licensed Product and each country within the Territory (For countries outside of the United States, such forecast shall be provided in both US Dollars and in local currency); (v) Projected market share of the Licensed Products for each country within the Territory; (vi) Overall marketing strategy and specific marketing strategies for each country within the Territory; (vii) Overall promotional plans and specific promotional plans for each country within the Territory; - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 2 (viii) Plans for participation in trade shows for each country within the Territory; (ix) Advertising and promotional budgets for each Licensed Product for each country within the Territory; (x) Planned product development schedule, ship dates and Marketing Dates, by Platform, for each Licensed Product for each country within the Territory; (xi) Plans for modifying the Licensed Products for [*], as well as Licensee's prospective partners with expertise in the [*] interactive game industry and Licensee's distribution, marketing and sales plans for [*]. On or before [*] of each calendar year during the Term, Licensee shall submit for Licensor's prior written approval, an updated version of the Business Plan addressing the above items for the remainder of the Term. Any significant deviation during the Term from the most recently approved Business Plan must be submitted to Licensor for prior written approval. (c) "BUSINESS REVIEWS": Licensee shall meet with Licensor on at least a quarterly basis to discuss the implementation of the Business Plan and results of the business relating to the Licensed Products. At such quarterly Business Reviews (and at such other times during the Term as Licensor shall reasonably request), Licensee shall provide to Licensor: (i) copies of all market research results relating to the Licensed Products or advertising therefor, including, without limitation, viability tests, commercial tests and line tests. Licensee shall also provide to Licensor access to Licensee's head of market research for purposes of interpretation of such market research results; and (ii) information, in such form as Licensor shall reasonably request, regarding inventory movement, inventory on-hand, and sales results for each Licensed Product on a country-by-country [*] basis [*]; and (iii) market share data, in such form as Licensor shall reasonably request, including, without limitation, applicable Nielsen data. (d) "EDITORIAL AND EXECUTIVE PRODUCTION FEES": Licensee shall pay to Licensor the following Editorial and Executive Production Fees for each title developed by Licensee: [*]. The Editorial and Executive Production Fees shall be charged for each title for the Term of this Agreement. Licensee shall pay the Editorial and Executive Production Fees within [*] from the date of this Agreement. [*]. Payment shall be due [*] days from the date of the invoice. Provided that Licensee is not otherwise in default hereunder, any unused balance of fees after completion of a particular title will be refunded to Licensee within thirty (30) days after Gold Master approval. (e) "LICENSED PROPERTY": The elements, including, but not limited to, trademarks, copyrights, logos, character names, artwork, environmental settings, costumes and plot elements (the "Movie Elements"), depicted, included in, or associated with: - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 3 (i) the released version of the theatrical motion picture whose working title is "THE MATRIX 2" ("Movie II"); and (ii) the released version of the theatrical motion picture whose working title is "THE MATRIX 3" ("Movie III"). but only to the extent merchandising rights have been granted to Licensor in and to such Movie Elements. References herein to a "Motion Picture" or the "Motion Pictures" shall mean either or both of Movie II and Movie III. Excluded herefrom is the right to reproduce the names, likenesses, autographs, signatures, visual representations, audio recordings or voices (the "Name and Likeness") of the actors and actresses in the Motion Pictures (the "Performer(s)") except to the extent specifically permitted otherwise in writing by Licensor and then only to the extent the Performer(s) have granted merchandising rights to Licensor. Notwithstanding the foregoing, all uses of any of the Movie Elements and the Name and Likeness of the Performer(s) afforded hereunder must be specifically approved in writing by Licensor, pursuant to Paragraph 10 herein. Licensee acknowledges that the rights granted herein are limited to the Movie Elements and that any and all rights in, to or associated with any previously or subsequently produced style guides, books, comic books, television or theatrical motion picture or television series based on, derived from or related to the Motion Pictures, as well as with any sequels to, or spin-offs from, the Motion Pictures, are specifically excluded from this Agreement and may be licensed separately to any third party(s) of Licensor's choice at Licensor's sole discretion. (f) "LICENSED PRODUCT(S)" (each category below may be referred to from time to time herein as a "Platform"): (i) Sony Playstation II (ii) Sega Dreamcast (iii) Nintendo Color Gameboy (iv) Nintendo Gameboy Advance (v) Nintendo Gamecube (vi) Microsoft's upcoming X-Box (vii) CD-ROM and DVD-ROM specifically targeted and marketed solely for use as video games (i.e. in no event shall such product be targeted, marketed or sold as a "home entertainment" product or otherwise in a manner that in Licensor's reasonable judgment may be confused with product distributed and sold by Warner Home Video). The following products are specifically EXCLUDED from this Agreement: (A) [*]; - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 4 (B) [*]; (C) [*]; (D) [*]; (E) [*]; (F) [*]; (G) [*]; (H) [*]; and (I) [*]. (g) "MARKETING DATE": (i) For the first title based on Movie II, for Licensed Product (i)(Sony Playstation II), the Marketing Date shall be: (A) For the United States, Puerto Rico, U.S. Virgin Islands and Canada ("North America"), [*]; (B) For countries or territories other than North America, [*]. (ii) For Platforms other than Sony Playstation II, the Marketing Date for Licensed Products based on either Movie II or Movie III shall be no later than the target release date for such Platform as set forth in Licensee's initial Business Plan, as approved by Licensor. In the event that Licensee fails to provide such dates, [*], then Licensor shall set the Marketing Dates by written notice to Licensee. (iii) The Licensed Products shall not be released prior to [*] unless otherwise agreed by Licensor in writing. (h) "TERRITORY": (i) Worldwide excluding China, Guam, Saipan and Japan. (ii) Prior to the execution of this Agreement, Licensee has submitted to Licensor a business plan for [*] which includes, in addition to the information requested for the general Business Plan, the names of Licensee's prospective partners with expertise in the [*] interactive game industry, who will assist Licensee in modifying the Licensed Products for the [*] market and in distributing the Licensed Products in [*]. Licensor will add [*] to the Territory if, on or before [*], Licensee shall have engaged its partner for [*] from the prospective partners identified in Licensee's business plan for [*]. If Licensee does not timely satisfy the foregoing condition, Licensor shall be free to solicit other licensees for the Licensed Property for [*]. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 5 (i) "WBSS SALES": Licensee shall sell the Licensed Products to Warner Bros. Studio Stores ("WBSS") in accordance with the following terms: (i) Licensee shall at all times give highest priority to WBSS in the filling and shipment of orders for Licensed Products. In the event of a shortage of inventory of Licensed Products, Licensee shall supply WBSS with all quantities ordered by WBSS before filling orders for retailers in any other Channel of Distribution. (ii) Licensee shall offer the Licensed Products for sale to WBSS at a price equal to [*] and subject to any applicable legal restrictions. (iii) With respect to sales of Licensed Products made to WBSS locations within the United States, Licensee shall [*]. With respect to sales of Licensed Products made to WBSS locations within the United States, Licensee [*] shall report such sales separately in the periodic statements required in Paragraph 6 below. [*]. (iv) With respect to sales of Licensed Products made to WBSS locations outside the United States, Licensee shall pay royalties hereunder (as provided in Paragraph 4 below) and shall report such sales separately in the periodic statements required in Paragraph 6 below. Royalties with respect to sales of Licensed Products made to WBSS locations outside the United States [*]. (j) PRODUCT DESIGN AND DEVELOPMENT; CONVERSIONS: (i) Shiny and Perry shall be primarily responsible for the design and development of the initial Platform for the Licensed Products so long as their services are available to Licensee, and Licensee shall allow them to devote the amount of time reasonably necessary to develop the Licensed Products in compliance with Licensee's obligations hereunder. Licensee shall reasonably consult with Licensor if Licensee desires to reassign Shiny and/or Perry prior to the completion of design and development of the initial Platform for the Licensed Products; provided, however, that Licensee shall have final approval over any such reassignment of Shiny and/or Perry. In the event that Shiny or Perry are terminated by Licensee, or if there exists an incurable material default by Licensee under its agreement with Perry for his services, as determined by a court of competent jurisdiction, such that Perry or Shiny will no longer provide services to or on behalf of Licensee (through no fault of Licensor or its affiliates), Licensor shall be permitted to take any action that it deems to be necessary or advisable in order to have Shiny and/or Perry complete design and development of the Licensed Products, including without limitation entering into separate agreements with Shiny and/or Perry or any other entity that will provide the services of Perry, PROVIDED THAT Licensee's costs in connection with the Licensed Products shall be reimbursed in full and Licensor shall then pay to Licensee a developer's royalty upon all sales of the Licensed Products which Shiny and/or Perry helped to design, such royalty to be negotiated by the parties at such time, consistent with then prevailing industry standards. (ii) The conversion of a particular title from Platform to Platform may be handled by Licensee or by a conversion house chosen by Licensee, subject to the approval of Licensor. Shiny and Perry will be involved in such conversions to the extent necessary to maintain - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 6 the creative integrity of subsequent Platforms in relation to the initial Platform (Sony Playstation II) unless at least [*] of the assets from such initial Platform are used in the new Platform, in which case Shiny and Perry need not be involved in the conversion. (k) MILESTONES: Licensee shall deliver to Licensor the items set forth on Exhibit 1, on or before the dates specified for such items. (l) RELATED AGREEMENTS: On or before [*], Licensee shall deliver the following related agreements executed by Licensee, in a form acceptable to Licensor. [*]: (i) [*]; (ii) License Agreement from Licensee to Licensor, to be effective only if Licensee is unable to perform its obligations under this Agreement; (iii) Source Code Escrow Agreement, to be effective only if Licensee is unable to perform its obligations under this Agreement; and (iv) [*]. A default under this Agreement shall constitute a default under each of the above listed agreements, and a default under any of the above listed agreements shall constitute a default under this Agreement. 2. GRANT OF LICENSE. (a) Upon the terms and conditions hereinafter set forth, Licensor hereby grants to Licensee and Licensee hereby accepts for the Term of this Agreement, as hereinafter defined, a license to utilize the Licensed Property ON A NON-EXCLUSIVE BASIS solely upon or in connection with the manufacture, distribution and sale of the Licensed Products solely for retail sale throughout the Territory, subject to the provisions of Paragraph 2(b), below. (b) Notwithstanding the foregoing, Licensor shall give Licensee prior written notice of any license agreement between Licensor and a third party which, if this Agreement were an exclusive agreement as of the commencement of the Term, would conflict with the terms hereof. Notwithstanding anything to the contrary set forth in this Agreement, Licensor will grant Licensee exclusive rights under this Agreement, after a written request by Licensee, provided that all of the following conditions are satisfied: (i) The Guaranteed Consideration shall have been paid in full or Licensor shall have received an original irrevocable standby letter of credit in favor of Licensor, securing payment by Licensee to Licensor of the Guaranteed Consideration, royalties and all other amounts that may be due and payable by Licensee hereunder, in an aggregate face amount of $3,500,000, or, if less, the then-outstanding and unpaid amount of the Guaranteed Consideration (the "Letter of Credit"). If the Guaranteed Consideration has not been paid in full, then delivery of the Letter of Credit shall be a condition precedent to this Agreement becoming exclusive. The Letter of Credit shall have a term concurrent with the balance of the Term of this Agreement and shall be self- - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 7 liquidating to the amount of Guaranteed Consideration remaining unpaid under this Agreement. Upon payment to Licensor of the total amount of Guaranteed Consideration due under this Agreement, the Letter of Credit shall terminate. The Letter of Credit shall be issued by a United States bank acceptable to Licensor and shall contain terms and conditions satisfactory to Licensor in its reasonable discretion. In the event of the bankruptcy or insolvency of Licensee or upon the occurrence of any other default as set forth in Paragraph 15 below, in addition to Licensor's other rights and remedies hereunder, at law, in equity or otherwise, Licensor shall, at Licensor's election be entitled to draw down any amount up to the full face amount available under the Letter of Credit and retain all such sums as cash collateral and then or at any time thereafter apply such sums against any and all amounts then due or thereafter to become due to Licensor hereunder, at law, in equity or otherwise. Partial draws shall be permitted. (ii) There are no material defaults then existing under this or any other agreement between Licensee and Licensor; (iii) Release (i.e., general distribution and sale) of the initial Platform (Sony Playstation II), based on Movie II, to consumers has timely commenced (i.e., on or before the applicable Marketing Date) in accordance with the provisions of this Agreement; and (iv) Licensee shall have a debt to equity ratio of not less than 1:2.75 for a period of at least six (6) months prior to the date of such request. Alternatively, whether or not Licensee has complied with the foregoing conditions, Licensee may from time to time, not more frequently than once in any six (6) month period, request that this Agreement be converted to an exclusive agreement based upon Licensee's improved financial performance. Along with any such request, Licensee shall submit to Licensor an updated credit package and Licensor shall consider Licensee's request pursuant to Licensor's standard legal and credit policies and procedures. (c) No license is granted hereunder for the manufacture, distribution or sale of the Licensed Product(s) for publicity purposes, for sale or gift in combination with other products or services, as giveaways, as premiums used for the purpose of publicizing, promoting or increasing sales of any other product(s) or service(s), or in connection with any similar method of merchandising. Notwithstanding anything to the contrary contained herein, Licensee may (i) distribute, for promotional purposes only, not more than [*] units of each Licensed Product in the United States, and a total of not more than [*] units of each Licensed Product in territories other than the United States, as well as [*] "time limited" or reduced feature "demo" versions, subject to Licensor's approval rights set forth in Paragraph 10; and (ii) subject to the prior written approval of Licensor on a case-by-case basis, and timely payment of all amounts that may then be due hereunder, allow the Licensed Products to be bundled with other products in connection with Licensee's "OEM" (Original Equipment Manufacturer) business where, by way of example only, multiple software products may be included with the purchase of a game console or pc hardware. (d) Licensee specifically understands and agrees that no rights are granted herein with respect to the Warner Bros. "shield" logo or trademark (the "Warner Bros. Shield"), or any other trademark(s), logo(s) or copyrights owned by Licensor other than those specifically set forth - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 8 above in the Licensed Property, it being understood that all rights in and to said properties are reserved exclusively to Licensor for use and/or licensing as it deems appropriate to third party(s) of its choice. (e) Notwithstanding anything to the contrary contained herein, including the general prohibition on use of the Warner Bros. Shield, the Licensed Property shall also include the Warner Bros. Interactive Entertainment Name/Logo (the "Name/Logo") as shall be provided by Licensor and as such may be changed by Licensor from time to time. Licensee shall utilize the Name/Logo on such Licensed Products and in such manner as Licensor shall designate. The parties agree that, notwithstanding anything to the contrary contained elsewhere in this Agreement, Licensee's use of the Name/Logo shall be on a non-exclusive basis. (f) Without limiting any other approval rights of Licensor as contained herein, no television commercials may be utilized under this Agreement without the specific prior written approval of Licensor. (g) Subject to the terms and conditions hereof, Licensee may advertise, promote and sell the Licensed Product(s) online over the Internet, in compliance with Licensor's online policies and guidelines, and provided that Licensee's online site contains a hyperlink to Licensor's website for the Motion Picture. 3. TERM. The term ("Term") of this Agreement shall commence on May 1, 2000 and shall expire on December 31, 2005. Notwithstanding anything to the contrary set forth above, as to any Licensed Products developed hereunder subsequent to, and other than, any Platform for the first title (i.e., other than for any Platform of "Game 1"), the Term shall be extended to the date which is three (3) years after the first to occur of (i) release of the initial Platform of any title of such subsequent Licensed Products for general distribution and sale to the public; (ii) theatrical release of Movie III in North America; or (iii) December 31, 2003. 4. CONSIDERATION. In full consideration for the rights, licenses and privileges herein granted to Licensee, Licensee shall pay to Licensor the following: (a) GUARANTEED CONSIDERATION: For the rights herein granted the sum of [*] payable as follows: - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 9 DATE AMOUNT ---- ------ Upon execution of this Agreement [*] On or before [*] [*] On or before [*] [*] On or before [*] [*] All Guaranteed Consideration paid by Licensee pursuant to this subparagraph 4(a) shall be applied against such royalties as are or have become due Licensor under subparagraph 4(d). [*]. (b) ADDITIONAL CONSIDERATION: (i) It is contemplated that a minimum of two Licensed Product titles will be developed and sold pursuant to this Agreement, one title for Movie II and one title for Movie III. It is critical to Licensor that the first Platform (i.e., Licensed Product (i) (Sony Playstation II)) based on Movie II be released for general distribution and sale to the public [*]. The development of such Licensed Products, and the distribution and sale of such Licensed Products [*], is integral to the development, filming, production, distribution and marketing of Movie II. If the Sony Playstation II Platform based on Movie II is not released for general distribution and sale to the public [*], then Licensee shall pay to Licensor the additional consideration provided for below (collectively, the "Additional Consideration"): (A) [*], which shall be immediately due and payable by Licensee to Licensor; or (B) alternatively, in lieu of the payment provided for in subparagraph (A) above, Licensee in its sole discretion, upon written notice to Licensor delivered on or before the Marketing Date for such Sony Playstation II Platform, may elect instead to increase the royalty rates payable under Paragraph 4(d) of this Agreement by [*]. Such additional [*] royalty shall be payable on all Net Sales of all Licensed Products (including OEM sales) until the cumulative amount of such additional [*] royalty equals [*] or until the end of the Term (including any extension thereof, if applicable), whichever is first to occur. (ii) Notwithstanding anything to the contrary set forth in this Agreement, the Additional Consideration shall not be offset by, or applied against, Royalties, Guaranteed Consideration or any other amounts that may otherwise be due or payable hereunder. (iii) Licensee shall be given a day for day extension for delays that are caused by Licensor or others engaged by Licensor to perform services in connection with the Licensed Products (a "Licensor's Delay"), provided that Licensee gives Licensor written notice as soon as reasonably possible, and in any event within seven (7) days after the occurrence of such alleged Licensor's Delay, indicating that development of the Licensed Products is being delayed, the party that Licensee believes is responsible for such delay, and the act or omission that is causing such delay. The Additional Consideration shall become due and payable only after Licensee has been - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 10 credited for any such Licensor's Delays with respect to the applicable title. Any such extension of the Marketing Date as the result of such Licensor's Delay must be confirmed in writing by Licensor to be effective. (iv) In addition, Licensor and Licensee will implement the following procedure in order to, if possible, ensure that the parties achieve the goal of releasing the Sony Playstation II Platform [*]. Licensor and Licensee understand that changes are difficult to incorporate and may necessitate changes that can impact the Licensed Products on many levels. Consequently, substantially all fundamental game play changes must be provided to Licensee on or before [*] or the date which is [*], whichever is later. Within forty-five (45) days after such date, Licensor and Licensee, including the development teams working on the Licensed Products and Licensor's licensing team, will meet to determine whether there are any fundamental game play changes to be undertaken, which ones, and whether any or all of those fundamental game play changes pose a threat to the goal of releasing the Sony Playstation II Platform based on Movie II, [*]. Licensee's development team will advise Licensor which changes cannot be made, or which features cannot be completed, in time to release the Sony Playstation II Platform [*]. If Licensor nonetheless wants such changes or features incorporated, then a new Marketing Date will be established by mutual agreement of the parties at such meeting and the Additional Consideration provided for hereunder shall not be due and payable unless Licensee fails to meet such new Marketing Date requirement. (v) If Licensee elects to make the lump sum payment of Additional Consideration, and Licensor has timely received such payment but subsequently decides to terminate this Agreement prior to the release of the Sony Playstation II Platform based on Movie II due to the delay in releasing such Licensed Products, then if such termination by Licensor is within six (6) months after the Marketing Date, Licensor will refund the Additional Consideration to Licensee within ten (10) business days after the date of Licensor's notice of termination. Nothing contained in this Paragraph shall limit or restrict any other rights or remedies of Licensor, including any other termination rights, pursuant to this Agreement. (c) LETTER OF CREDIT: See Paragraph 2(b)(i). (d) ROYALTY PAYMENTS: Licensee shall pay to Licensor royalties on all Net Sales (as such term "Net Sales" is defined herein) of the Licensed Products, as follows: (i) [*] of all Net Sales, from [*] units of each original title, including all platforms and formats except for OEM sales of Licensed Products; and thereafter, (ii) [*] of all Net Sales, from [*] units of the same original title, including all platforms and formats except for OEM sales of Licensed Products; and thereafter, (iii) [*] of all Net Sales, from [*], of the same original title, including all platforms and formats except for OEM sales of Licensed Products. (iv) Notwithstanding anything to the contrary set forth above, royalties on OEM sales of Licensed Products shall be [*] of Net Sales of such Licensed Products throughout the - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 11 Term of this Agreement, without any escalation, and quantities of OEM sales shall not be counted for purposes of determining increases in the royalty rates, above. The term "Net Sales" shall mean all monies billed or billable by Licensee, from the exercise of its rights to distribute and sell Licensed Product(s) in the Territory before any allowances or discounts have been deducted from the normal selling price, inclusive of interest, monetary correction, and any other payment charges whatsoever, less the following items only: (A) any sales, excise or value added taxes, which are separately stated, and which are required to be collected from customers as part of Net Sales, and which are payable to taxing authorities; (B) quantity discounts; (C) actual returns (i.e., that are not resold) not exceeding [*] of total units sold; and (D) [*] Except to the extent provided in the immediately preceding sentence, no deduction shall be made for the cost of goods sold or for any bad debts, or any reserves therefor, importing costs, selling costs, advertising costs, real estate taxes, business license taxes, net income taxes, franchise taxes, withholding taxes or any other taxes not billed to customers of Licensee as part of Net Sales. Net Sales shall not include any sales by Licensee or its affiliated companies, to Licensee or its affiliated companies, the primary purpose of which is the transfer of Licensed Product for eventual resale; provided, however, that Royalties as a result of such sales shall be based upon and paid when the Licensed Product is ultimately sold to the distributor (including any distributor in which Licensee has less than a controlling interest so long as the transaction is an arms-length transaction at prevailing market rates), retailer, consumer or other unaffiliated third party. Licensee will pay all taxes, customs duties, assessments, and excise charges or fees, except as provided in subparagraph 4(d)(A), and other charges levied upon the importation of or assessed against the Licensed Product under this Agreement, as well as all Licensee's costs of doing business and Licensor shall have no liability therefor. Royalties shall be payable concurrently with the periodic statements required in Paragraph 6 hereof except to the extent offset by Guaranteed Consideration theretofore remitted. It is a material term and condition of this Agreement that Licensee report Net Sales and report and pay royalties on a country-by-country or region-by-region basis, as provided in Paragraph 6, below. In the event Licensee fails to do so, Licensor shall have the right to terminate this Agreement, in accordance with the provisions of Paragraph 15 herein. [*] (e) Separately from and in addition to the Guaranteed Consideration or Royalties or any other amounts payable hereunder, Licensor shall pass through to Licensee, and Licensee shall - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 12 either reimburse Licensor for amounts paid by Licensor, or shall pay directly to the actors and actresses, as directed by Licensor, all amounts payable to such actors and actresses in connection with the Licensed Products, as royalties or otherwise ("Talent Participation Fees"), not to exceed, in the aggregate, [*]. Licensee shall have the right to audit Licensor once in any twelve (12) month period, during normal business hours, upon not less than thirty (30) days prior written notice, for a period of two (2) years from the date of any invoice to Licensee for such amounts. For purposes of clarification, separate from the foregoing, Licensee shall be solely responsible for clearing all third party rights in connection with the Licensed Products, and for any related fees and costs, including any re-use fees or other payments to third parties that may be required under applicable law or guild or collective bargaining agreements. Upon written request by Licensee, Licensor will make reasonable efforts to assist Licensee in Licensee's efforts to clear such third party rights. 5. RESERVATION OF RIGHTS; PREMIUMS. (a) Licensor reserves all rights not expressly conveyed to Licensee hereunder. Subject to any exclusive rights that might be granted to Licensee pursuant to Paragraph 2(b) hereof, Licensor may grant licenses to others to use the Licensed Property, artwork and textual matter in connection with other uses, services and products without limitation. (b) Notwithstanding anything to the contrary stated herein, Licensor, for itself and its affiliates, specifically reserves the right, without limitation throughout the world, to use, or license any third party(s) of its or their choice to use the Licensed Property for the marketing, promotion, manufacture, distribution and sale of products similar or identical to those licensed herein in Paragraph 1(f) above for sale through any catalogue(s) produced or distributed by or on behalf of Licensor or its affiliated companies, or for sale or distribution in any theaters or arenas, or for sale or distribution in connection with any home video product, including DVD or other formats, or for sale or distribution in any retail stores operated by or on behalf of Licensor, its affiliated companies, franchisees, or licensees, or for sale or distribution in any theme/amusement parks operated by or on behalf of Licensor or its licensees, Six Flags, Premier Parks, Movie World, or their affiliated companies. In addition, Licensor reserves the right to allow Six Flags and Movie World to manufacture (or have manufactured by a third party) products similar or identical to those licensed herein for distribution or sale in theme and/or amusement parks owned or operated by Six Flags and/or Movie World. [*]. (c) Subject to Paragraph 2(c) hereof, Licensee agrees that it will not use, or knowingly permit the use of, and will exercise due care that its customers likewise will refrain from the use of, the Licensed Products as a premium, except with the prior written consent of Licensor. Subject to Licensor's prior written approval as aforesaid, Licensee shall pay to Licensor a sum equal to [*] of all premium sales. For purposes of this paragraph, the term "premium" shall be defined as including, but not necessarily limited to, combination sales, free or self-liquidating items offered to the public in conjunction with the sale or promotion of a product or service, including traffic building or continuity visits by the consumer/customer, or any similar scheme or device, the prime intent of which is to use the Licensed Products in such a way as to promote, publicize and or sell the products, services or business image of the user of such item. Notwithstanding anything to the contrary set forth herein, this paragraph shall not apply to OEM sales of Licensed Products, which are addressed separately elsewhere in this Agreement. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 13 6. PERIODIC STATEMENTS. (a) Within [*] days after the end of the first calendar quarter after the date of execution of the License Agreement and promptly on the [*] day after the end of each calendar quarter thereafter, Licensee shall furnish to Licensor complete and accurate statements certified to be accurate by Licensee, or if a corporation, by an officer of Licensee, showing with respect to all Licensed Products distributed and sold by Licensee during the preceding calendar quarter, on a Platform by Platform basis, with OEM sales and WBSS sales separately reported, the (i) number of units; (ii) country or region (as specified below) in which manufactured, sold and/or to which shipped; (iii) description (as such term is defined below) of the Licensed Products; (iv) gross sales price; (v) itemized deductions from gross sales price, and (vi) Net Sales price, together with any returns made during the preceding calendar quarter. Such statements shall be in such formats as Licensor shall require (which formats may be amended by Licensor from time to time), and shall be furnished to Licensor whether or not any of the Licensed Products have been sold during the calendar quarters to which such statements refer. In the event Licensee has royalties earned in currencies other than in U.S. Dollars, then Licensee shall convert said amounts into U.S. Dollars based upon the exchange rate published by the Wall Street Journal as of the fifteenth day of the applicable month or if such day shall fall on a non-business day then as of the first business day following said fifteenth day. Receipt or acceptance by Licensor of any of the statements furnished pursuant to this Agreement or of any sums paid hereunder shall not preclude Licensor from questioning the correctness thereof at any time, and in the event that any inconsistencies or mistakes are discovered in such statements or payments, they shall immediately be rectified and the appropriate payments made by Licensee. Upon demand of Licensor, Licensee shall at its own expense, but not more than once in any twelve (12) month period, furnish to Licensor a detailed statement certified by an officer of Licensee showing, on a Platform by Platform basis, with OEM sales and WBSS sales separately reported, the (i) number of units; (ii) country or region (as specified below) in which manufactured, sold and/or to which shipped; (iii) description of the Licensed Products; (iv) gross sales price; (v) itemized deductions from gross sales price and (vi) Net Sales price of the Licensed Products covered by this Agreement distributed and/or sold by Licensee up to and including the date upon which Licensor has made such demand. For purposes of this subparagraph, the term "Description" shall mean a detailed description of the Licensed Products including the nature of each of the Licensed Products, any and all names and likenesses, whether live actors or animated characters, from the Licensed Property utilized on the Licensed Products and/or any related packaging and/or wrapping material, and any other components of the Licensed Property utilized on the Licensed Products and/or any related packaging and/or wrapping material. In the event Licensor is responsible for the payment of any additional third party participations based on Licensee not reporting by character name and likeness as provided above, Licensee shall reimburse Licensor for the full amount of all such third party claims, including without limitation, the participation itself, interest, audit and attorneys' fees. Licensee understands and agrees that it is a material term and condition of this Agreement that Licensee include the Description on all statements. In the event Licensee fails to do so, Licensor shall have the right to terminate this Agreement, in accordance with the provisions of Paragraph 15 herein. Notwithstanding anything to the contrary set forth above, Licensee shall report and pay royalties on a country-by-country basis for the following countries: [*]; and otherwise on a region-by-region basis as follows: [*]. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 14 (b) The statements and payments required hereunder shall each reference the contract number(s) and shall be delivered as follows: If by United States Postal Service, then to: WARNER BROS. CONSUMER PRODUCTS 21477 Network Place Chicago, IL 60673-1214 If by Federal Express or other overnight mail or courier service, then to: BANK ONE Attention WBCP lockbox #21477 525 West Monroe 8th Floor Mail Room Chicago, IL 60661 Telephone Number 312-732-5500 (c) Any payments which are made to Licensor hereunder after the due date required therefor, shall bear interest at [*] (or the maximum rate permissible by law, if less) from the date such payments are due to the date of payment. Licensor's right hereunder to interest on late payments shall not preclude Licensor from exercising any of its other rights or remedies pursuant to this Agreement or otherwise with regard to Licensee's failure to make timely remittances. (d) [*] 7. BOOKS AND RECORDS. (a) Licensee shall keep, maintain and preserve (in Licensee's principal place of business, or for any records more than two years old, in a reasonably secure location near such principal place of business, available on not less than forty-eight (48) hours notice) for a period of at least two years following the termination or expiration of the Term of this Agreement or any renewals hereof (if applicable), complete and accurate records of accounts including, without limitation, purchase orders, inventory records, invoices, correspondence, banking and financial and other records pertaining to the various items required to be submitted by Licensee as well as to ensure Licensee's compliance with local laws as required pursuant to Paragraph 13(f) hereof. Such records and accounts shall be available for inspection and audit at any time or times during or for a period of up to [*] years after the Term of this Agreement or any renewal(s) hereof (if applicable) during reasonable business hours and upon reasonable notice by Licensor or its nominees. Licensee agrees not to cause or permit any interference with Licensor or nominees of Licensor in the performance of their duties. During such inspections and audits, Licensor shall have the right to take extracts and/or make copies of Licensee's records as it deems necessary. (b) The exercise by Licensor in whole or in part, at any time of the right to audit records and accounts or of any other right herein granted, or the acceptance by Licensor of any statement or statements or the receipt and/or deposit by Licensor, of any payment tendered by or on - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 15 behalf of Licensee shall be without prejudice to any rights or remedies of Licensor and such acceptance, receipt and/or deposit shall not preclude or prevent Licensor from thereafter disputing the accuracy of any such statement or payment. (c) If pursuant to its right hereunder Licensor causes an audit and inspection to be instituted which thereafter discloses a deficiency between the amount found to be due to Licensor and the amount actually received or credited to Licensor, then Licensee shall, upon Licensor's demand, promptly pay the deficiency, together with interest thereon at the then current prime rate from the date such amount became due until the date of payment, and, if the deficiency is more than [*] of all royalties paid by Licensee during the period covered by the audit, then Licensee shall pay the reasonable costs and expenses of such audit and inspection. 8. INDEMNIFICATIONS. (a) During the Term, and continuing after the expiration or termination of this Agreement, Licensor shall indemnify Licensee and shall hold it harmless from any loss, liability, damage, cost or expense, arising out of any claims or suits which may be brought or made against Licensee by reason of the breach by Licensor of the warranties or representations as set forth in Paragraph 13 hereof, provided that Licensee shall give prompt written notice, and full cooperation and assistance to Licensor relative to any such claim or suit and provided, further, that Licensor shall have the option to undertake and conduct the defense of any suit so brought. Licensee shall not, however, be entitled to recover for lost profits. Licensee shall cooperate fully in all respects with Licensor in the conduct and defense of said suit and/or proceedings related thereto. (b) During the Term, and continuing after the expiration or termination of this Agreement, Licensee shall indemnify Licensor, Time Warner Entertainment Company, L.P. ("TWE") and each of its affiliates and shall hold them harmless from any loss, liability, damage, cost or expense arising out of any claims or suits which may be brought or made against Licensor, TWE or any of its affiliates, by reason of: (i) any breach of Licensee's covenants and undertakings hereunder; (ii) any unauthorized use by Licensee of the Licensed Property; (iii) any use of any trademark, or copyright (except trademarks or copyrights in the Licensed Property used in accordance with the terms of this Agreement), design, patent, process, method or device; (iv) Licensee's non-compliance with any applicable federal, state or local laws or with any other applicable regulations; and (v) any alleged defects and/or inherent dangers (whether obvious or hidden) in the Licensed Products or the use thereof. (c) With regard to Paragraph 8(b) above, Licensee agrees to obtain, at its own expense, Comprehensive Commercial General Liability Insurance, including product liability and contractual liability coverage providing adequate protection for Licensor and Licensee against any such claims or suits in amounts no less than [*] per occurrence, combined single limits. Simultaneously with the execution of this Agreement, Licensee undertakes to submit to Licensor a fully paid policy or certificate of insurance naming Licensor, TWE and each of its affiliates as additional insured parties and, requiring that the insurer shall not terminate or materially modify such policy or certificate of insurance without written notice to Licensor at least thirty (30) days in advance thereof. Such insurance shall at all times be primary and not contributory with any - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 16 insurance carried by Licensor, TWE or any of their affiliates. Further the delivery of the policy or certificate, as provided in this Paragraph 8(c) are material obligations of Licensee. 9. ARTWORK; TRADEMARKS AND COPYRIGHTS. Licensee shall, within thirty (30) days of receiving an invoice, pay Licensor for artwork executed for Licensee by Licensor (or by third parties under contract to Licensor) at Licensee's request for use in the development of the Licensed Products and any related packaging, display and promotional materials at Licensor's prevailing commercial art rates. The foregoing shall include any artwork that, in Licensor's reasonable opinion, and subject to Licensee's written approval, is necessary to modify artwork initially prepared by Licensee and submitted for approval. Estimates of artwork charges are available upon request. (a) TRADEMARKS: (i) Licensee agrees that it will cause to appear indelibly and legibly on each of the Licensed Product(s) and all advertising material, tags, labels and devices bearing the Licensed Property, the following notice or such other notice as may be approved or required by Licensor: (TM) & (C) 200X WARNER BROS. (IN THE US AND CANADA) (TM) &(C) 200X VILLAGE ROADSHOW FILMS (BVI) LIMITED. (IN ALL OTHER TERRITORIES) (The year date shall be as instructed by Licensor) (ii) Licensee further agrees that it will not apply for or seek to obtain trademark registration for the Licensed Property and that Licensor may, at its option, apply for and obtain in its own name trademark registrations for the Licensed Product(s), and that, upon request, Licensee will furnish necessary specimens or facsimiles for such purpose free of cost, as well as evidence of the date of first shipment or sale of each Licensed Product in interstate or foreign or other federally regulable U.S. commerce and, if earlier, also in intrastate commerce. (iii) Licensee agrees that if Licensee receives knowledge of the use of the Licensed Property by anyone other than Licensee on Licensed Product(s) or products confusingly similar thereto, Licensee will call such fact to the attention of Licensor. Licensor shall then have the option to institute legal proceedings to prevent such use, and Licensee shall cooperate and assist in the prosecution of any such action. If demanded by Licensor, Licensee shall join in or cooperate in the prosecution of any such legal proceeding as may be instituted by Licensor. Any such legal proceedings shall be solely at Licensor's expense. If Licensee is joined in such proceeding, Licensor shall indemnify and hold harmless Licensee from and against any claim, sanction, liability, damages, attorney's fees, judgments or orders of any kind arising out of such proceeding. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 17 (b) COPYRIGHTS: (i) GAME PROGRAM: The copyright in and to the computer program (object and source code) incorporated into any Licensed Product (herein the "Program") shall be owned as follows: (A) If a Program is created solely by Licensee or an approved sublicensee under license or authority of Licensee without any contribution by Licensor to the creation of that Program in the form of programming effort, then the copyright in and to such Program shall be owned solely by Licensee; (B) If a Program is created jointly by Licensee and Licensor, then the copyright in and to such Program shall be owned jointly by Licensor and Licensee. (ii) AUDIO-VISUAL DISPLAY: The copyright in and to the images displayed on the screen, and the sounds produced during the course of the game play, including all possible combinations and sequences thereof, in both the "attract mode" and the "play mode," and the underlying script therefor (herein the "Audio-Visual Display") shall be owned as follows: (A) The copyright in and to all elements of the Audio-Visual Display constituting pre-existing material of Licensor as set forth in Paragraph 1(e) "Licensed Property" such as, without limitation, the characters portrayed in the Motion Pictures or any reproductions thereof, or derived therefrom and incorporating the Licensed Property, as well as any special effects provided to Licensee by Licensor or its affiliates (hereinafter "Pre-Existing Material"), are acknowledged to be the sole and exclusive property of Licensor and shall remain the sole and exclusive property of Licensor; (B) The copyright in and to all elements of the Audio-Visual Display constituting original material created by Licensee, and which does not incorporate any Licensed Property, shall be the sole and exclusive property of Licensee. Licensee retains sole and exclusive ownership of all of Licensee's inventions, whether patented or not, trade secrets and similar information and processes of a confidential nature, and works of authorship, whether copyrighted or not, whether manifested in the Audio-Visual Display or not, and whether embodied in hardware or software used to create the Audio-Visual Display. Licensee shall be free to use and license others to use elements of the Audio-Visual Display owned by Licensee. (iii) PACKAGING, ADVERTISING AND PROMOTIONAL MATERIALS: Except as otherwise provided herein, the copyrights in and to any original material, other than the Programs and the Audio-Visual Displays, which is created by or for Licensee for the purpose of packaging, advertising or promoting the Licensed Product(s), including but not limited to the enclosure for the Licensed Product(s), all cartons, containers, packing and wrapping material, tags, labels, imprints or other devices, and all advertising and promotional materials (all such material hereinafter referred to as the "Other Materials"), shall be owned solely and exclusively by Licensee; provided, however, that the copyright in and to all elements of the Other Materials that constitute Licensor's Pre-Existing Material, material furnished to Licensee by or on behalf of Licensor, or any material that is derivative - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 18 of the foregoing, is acknowledged to be owned solely and exclusively by Licensor and shall remain the sole and exclusive property of Licensor. (iv) LIMITATIONS ON OWNERSHIP RIGHTS: The parties agree and acknowledge that each shall have the same right as any person or party with regard to any material incorporated in the Licensed Product(s), Other Materials, Programs, or Audio-Visual Displays which is in the public domain (provided that it has not entered into the public domain as the result of an act or omission in breach of this Agreement or any other written agreement by or between the parties hereto). (v) ARTWORK: The Licensed Property shall be displayed or used only in such form and in such manner as has been specifically approved in writing by Licensor in advance and Licensee undertakes to assure usage of the trademark(s) and character(s) solely as approved hereunder. Licensee further agrees and acknowledges that any and all Artwork (defined below) created, utilized, approved and/or authorized for use hereunder by Licensor in connection with the Licensed Products or which otherwise features or includes the Licensed Property shall be owned in its entirety exclusively by Licensor. "Artwork" as used herein shall include, without limitation, all pictorial, graphic, visual, audio, audio-visual, digital, literary, animated, artistic, dramatic, sculptural, musical or any other type of creations and applications, whether finished or not, including, but not limited to, animation, drawings, designs, sketches, images, tooling and tooling aids, illustrations, film, video, electronic, digitized or computerized information, software, object code, source code, on-line elements, music, text, dialogue, stories, visuals, effects, scripts, voiceovers, logos, one-sheets, promotional pieces, packaging, display materials, printed materials, photographs, interstitials, notes, shot logs, character profiles and translations, produced by Licensee or for Licensee, pursuant to this Agreement, excluding any intellectual property rights in and to any elements that are wholly owned by Licensee and that do not include the Licensed Property and specifically excluding any rights of Licensee in and to the Program, as provided in Paragraph 9(b)(i) above. Licensor reserves for itself or its designees all rights to use any and all Artwork created, utilized and/or approved hereunder without limitation. Licensee acknowledges that, as between Licensor and Licensee, the Licensed Property and Artwork and all other depictions expressions and derivations thereof, and all copyrights, trademarks and other proprietary rights therein are owned exclusively by Licensor and Licensee shall have no interest in or claim thereto, except for the limited right to use the same pursuant to this Agreement and subject to its terms and conditions. Licensor's rights hereunder specifically exclude Licensee's ownership of any artwork that utilizes intellectual property wholly owned by Licensee or third parties and which does not incorporate the Licensed Property, whether such artwork is used in Licensee's packaging, advertising or products. (vi) WORK-MADE-FOR-HIRE: Licensee agrees and acknowledges that any Artwork incorporating the Licensed Property and created by Licensee or for Licensee hereunder, including without limitation any special effects created by Licensor or any of its affiliates, but specifically excluding copyrights, trademarks or other intellectual property wholly owned by Licensee is a "work made for hire" for Licensor under the U.S. Copyright Act, and any and all similar provisions of law under other jurisdictions, and that Licensor is the author of such works for all purposes, and that Licensor is the exclusive owner of all the rights comprised in the undivided copyright and all renewals, extensions and reversions therein, in and to such works in perpetuity and throughout the universe. Licensee hereby waives and releases in favor of Licensor all rights (if any) - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 19 of "droit moral," rental rights and similar rights in and to the Artwork (the "Intangible Rights") and agrees that Licensor shall have the right to revise, condense, abridge, expand, adapt, change, modify, add to, subtract from, re-title, re-draw, re-color, or otherwise modify the Artwork, without the consent of Licensee. Licensee hereby irrevocably grants, transfers and assigns to Licensor all right, title and interest, including copyrights, trademark rights, patent rights and other proprietary rights, it may have in and to the Artwork, in perpetuity and throughout the universe, and to all proprietary depictions, expressions or derivations of the Licensed Property created by or for Licensee. Licensee acknowledges that Licensor shall have the right to terminate this Agreement in the event Licensee asserts any rights (other than those specifically granted pursuant to this Agreement) in or to the Licensed Property or Artwork. Licensee hereby warrants that any and all work created by Licensee under this Agreement apart from the materials provided to Licensee by Licensor is and shall be wholly original with or fully cleared by Licensee and shall not copy or otherwise infringe the rights of any third parties, and Licensee hereby indemnifies Licensor and will hold Licensor harmless from any such claim of infringement or otherwise involving Licensee's performance hereunder. At the request of Licensor, Licensee shall execute such form(s) of assignment of copyright or other papers as Licensor may reasonably request in order to confirm and vest in Licensor the rights in the properties as provided for herein. In addition, in the event that Licensee fails to comply with Licensor's request within thirty (30) days after written request by Licensor, Licensee hereby appoints Licensor as Licensee's Attorney-in-Fact to take such actions and to make, sign, execute, acknowledge and deliver all such documents as may from time to time be necessary to confirm in Licensor, its successors and assigns, all rights granted herein. If any third party makes or has made any contribution to the creation of Artwork authorized for use hereunder, Licensee agrees to obtain from such party a full confirmation and assignment of rights so that the foregoing rights shall vest fully in Licensor, in the form of the Contributor's Agreement attached hereto as Exhibit 2 and by this reference made a part hereof, prior to commencing work, and subject to the prior written approval of Licensor, and subject to the prior written approval of Licensor ensuring that all rights in the Artwork and Licensed Property arise in and are assigned to Licensor. Promptly upon entering into each such Contributor's Agreement, Licensee shall give Licensor a copy of such Contributor's Agreement. [*] (vii) USE OF THIRD PARTY CONTENT: Licensee shall not use any third party content or technology in the Licensed Product(s), including without limitation any audio elements from the soundtracks of any motion picture or television series based upon the Licensed Property without Licensor's prior written approval, and unless: (i) Licensee is expressly permitted to use such third party content or technology pursuant to written agreements with all third party rights holders; and (ii) Licensee has acquired for Licensee and Licensor all rights, permissions, clearances, releases or other authorizations necessary to use such third party content or technology in conjunction with the development and exploitation of the Licensed Products(s) anywhere in the Territory by Licensee or Licensor or by either party's licensees, successors or assigns in perpetuity. Licensee shall be responsible, in perpetuity, for all payments in connection with the use of third party content or technology, except as the parties mutually agree upon at such time as Licensor approves of the use of such third party content or technology. Licensor shall have the right to review all Licensee agreements with third parties to ensure their acceptability and Licensee shall deliver such agreements to Licensor within fourteen (14) business days of Licensor's request therefor. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 20 10. QUALITY OF LICENSED PRODUCT(S). (a) Licensee agrees that the Licensed Product(s) shall be of high standard and of such style, appearance and quality as shall be adequate and suitable to their promotion, distribution and sale to the best advantage of Licensee and Licensor. The quality and style of such product and its cartons and containers shall be subject to Licensor's approval. To this end Licensee shall, before selling or distributing any of the Licensed Product(s), furnish to Licensor free of cost for its written approval as to quality and style, the materials specified in the "Milestones" set forth on Exhibit 1 attached hereto. In the event that any Milestone deliverable shall not have been approved, disapproved, or otherwise commented upon within ten (10) business days after receipt thereof by Licensor, then Licensee shall have the right to so notify Licensor of such fact by facsimile or by overnight delivery service. In the event that Licensor fails to then approve, disapprove or otherwise comment upon the submitted items within seven (7) business days after receipt by it of such communication, any items so submitted shall be deemed to have been approved subject to the rights of any third parties (e.g., as to the use of the Name and Likeness of a Performer). Licensee shall, in addition, thereafter furnish to Licensor free of cost, for its written approval, forty-five (45) production samples of each such Licensed Product(s) together with their cartons and containers including packaging and wrapping material, to ensure quality control simultaneously upon distribution to the public. In addition, Licensee shall provide Licensor with six (6) catalogs which display all of Licensee's products, not just the Licensed Products, if such catalogs exist. [*]. After samples of Licensed Product(s) have been approved pursuant to this paragraph, Licensee shall not depart therefrom in any material respect without Licensor's prior written consent or add any additional element(s) such as in-pack flyers, business reply cards and so on without Licensor's approval in each case. Licensor shall have the right to withdraw its approval of samples if the quality of any Licensed Product ceases to be acceptable. (b) Any modification of a Licensed Product must be submitted in advance for Licensor's written approval as if it were a new Licensed Product. Approval of a Licensed Product which uses particular artwork does not imply approval of such artwork for use with a different Licensed Product. (c) Licensed Products must conform in all material respects to the final production samples approved by Licensor. [*]. (d) If any changes or modifications are required to be made to any material submitted to Licensor for its written approval in order to ensure compliance with Licensor's specifications or standards of quality, Licensee agrees promptly to make such changes or modifications. (e) [*]. (f) Subject to the terms hereof, including without limitation the approval process provided for in Paragraph 10(a) above, Licensee may utilize the Licensed Property for such - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 21 advertising, promotional and display materials for the Licensed Product(s) as in its judgment will best promote the sale of said Licensed Product(s). Licensee agrees that it will not use the Licensed Property or any reproduction thereof in any advertising, promotional or display material or in any other manner without Licensor's prior written approval not to be unreasonably withheld. Without limiting the foregoing, no television commercials may be utilized under this License without the specific prior approval of Licensor. Notwithstanding the approval process for other materials, in the event that any material submitted to Licensor for approval in connection with a television commercial shall not have been approved, disapproved or otherwise commented upon within thirty (30) days after receipt thereof by Licensor, then Licensee shall have the right to so notify Licensor of such fact by facsimile or by overnight delivery service. In the event that Licensor fails to then approve, disapprove or otherwise comment upon the submitted items within ten (10) business days after receipt by it of such facsimile or overnight delivery service any items so submitted shall be deemed to have been approved subject to the rights of third parties (e.g., as to the use of the Name and Likeness of a Performer). A reasonable number of production copies of all such advertising, promotional and display materials will be furnished to Licensor free of charge. (g) To avoid confusion of the public, Licensee agrees not to associate other characters or properties with the Licensed Property on the Licensed Products or in any packaging, promotional or display materials unless Licensee receives Licensor's prior written approval. Furthermore, Licensee agrees not to use the Licensed Property (or any component thereof) on any business sign, business cards, stationery or forms, nor as part of the name of Licensee's business or any division thereof. (h) Licensee shall use reasonable commercial efforts to notify its customers of the requirement that Licensor has the right to approve all promotional, display and advertising material pursuant to this Agreement. (i) Any animation used in electronic media, including but not limited to animation for television commercials and character voices for radio commercials, shall be produced by Warner Bros. Animation pursuant to a separate agreement between Licensee and Warner Bros. Animation, subject to Warner Bros. Animation's customary rates, except as may be otherwise specifically agreed in writing by Licensor. Licensee shall be provided, free of charge, with special effects and other elements of the Motion Pictures that may be developed in connection with the Motion Pictures; provided, however, that Licensee shall be required to pay for any services or materials, including without limitation any special effects, that are commissioned or requested by Licensee specifically for use in the Licensed Products, whether or not such materials are later used in either Motion Picture, at the standard rates customarily charged by such entity (even if an affiliate of Licensor), pursuant to a separate agreement with such entity. [*]. If a party other than Warner Bros. provides such services or creates or develops such materials, such other party shall be required to execute a Contributor's Agreement in the form attached hereto, confirming that Licensor is the owner of all rights in and to such materials or the results of such services. [*]. (j) Licensor's approval of Licensed Product(s) (including without limitation, the Licensed Product(s) themselves as well as promotional, display, and advertising materials) shall in no way constitute or be construed as an approval by Licensor of Licensee's use of any trademark, copyright and/or other proprietary materials, not owned by Licensor. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 22 (k) Notwithstanding the foregoing, if any of the Licensed Product(s) have already received Licensor's written approval prior to the execution of this Agreement, then Licensee shall not be required to resubmit such Licensed Product(s) for approval after execution hereof, except with respect to any modifications made to such Licensed Product(s), or to any packaging, hangtags, promotional and/or advertising materials. 11. DISTRIBUTION; SUBLICENSE/MANUFACTURE. (a) Licensee shall sell the Licensed Products either to jobbers, wholesalers, distributors or retailers for sale or resale and distribution directly to the public. [*]. If Licensee sells or distributes the Licensed Products at a special price (i.e., a price that is less than prevailing market rates in an arms-length transaction), directly or indirectly, to itself, including without limitation, any subsidiary of Licensee (including any affiliated distributors) or to any other person, firm, or corporation affiliated with Licensee or its officers, directors or major stockholders, for ultimate sale to unrelated third parties, Licensee shall pay royalties with respect to such sales or distribution, based upon the price generally charged the trade by Licensee. (b) Except as to materials set forth in Paragraph 9(b)(ii)(B), Licensee shall not be entitled to sublicense any of the Computer Program or Audio-Visual Display developed by Licensee pursuant to this Agreement. In the event Licensee is not the manufacturer of the Licensed Products, Licensee shall, subject to the prior written approval of Licensor, which approval shall not be unreasonably withheld, be entitled to utilize a third party manufacturer in connection with the manufacture and production of the Licensed Products, provided that such manufacturer shall execute a letter in the form of Exhibit 3 attached hereto and by this reference made a part hereof. In such event, Licensee shall remain primarily obligated under all of the provisions of this Agreement and any default of this Agreement by such manufacturer shall be deemed a default by Licensee hereunder. In no event shall any such third party manufacturer agreement include the right to grant any rights to subcontractors. 12. GOODWILL. Licensee recognizes the great value of the publicity and goodwill associated with the Licensed Property and acknowledges: (i) such goodwill is exclusively that of Licensor; and (ii) that the Licensed Property has acquired a secondary meaning as Licensor's trademarks and/or identifications in the mind of the purchasing public. Licensee further recognizes and acknowledges that a breach by Licensee of any of its covenants, agreements or undertakings hereunder will cause Licensor irreparable damage, which cannot be readily remedied in damages in an action at law, and may, in addition thereto, constitute an infringement of Licensor's copyrights, trademarks and/other proprietary rights in, and to the Licensed Property, thereby entitling Licensor to equitable remedies, and costs. 13. LICENSOR'S WARRANTIES AND REPRESENTATIONS. Licensor represents and warrants to Licensee that: - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 23 (a) It has, and will have throughout the Term of this Agreement, the right to license the Licensed Property to Licensee in accordance with the terms and provisions of this Agreement; and (b) The making of this Agreement by Licensor, and performance by Licensor as contemplated hereunder, does not violate any agreements, rights or obligations of any person, firm or corporation. 14. LICENSEE'S WARRANTIES AND REPRESENTATIONS. Licensee represents and warrants to Licensor that, during the Term and thereafter, except to the extent otherwise provided in subparagraphs (m), (n) and (o), below: (a) It will not attack the title of Licensor (or third parties that have granted rights to Licensor) in and to the Licensed Property or any copyright or trademarks pertaining thereto, nor will it attack the validity of the license granted hereunder; (b) It will not harm, misuse or bring into disrepute the Licensed Property, but on the contrary, will maintain the value and reputation thereof to the best of its ability; (c) It will manufacture, sell, promote and distribute the Licensed Products in an ethical manner and in accordance with the terms and intent of this Agreement, and in compliance with all applicable government regulations and industry standards; (d) It will not create any expenses chargeable to Licensor without the prior written approval of Licensor in each and every instance. It will not cause or allow any liens or encumbrances to be placed against, or grant any security interest (except to Licensor as provided hereunder) in, the Licensed Property without Licensor's prior written consent; (e) It will use commercially reasonable efforts to protect its right to manufacture, sell, promote, and distribute the Licensed Products hereunder; (f) It will at all times comply with all government laws and regulations, including but not limited to product safety, food, health, drug, cosmetic, sanitary or other similar laws, relating or pertaining to the manufacture, sale, advertising or use of the Licensed Products, and shall maintain its appropriate customary high quality standards during the Term hereof. It shall comply with any regulatory agencies which shall have jurisdiction over the Licensed Products and shall procure and maintain in force any and all permissions, certifications and /or other authorizations from governmental and/or other official authorities that may be required in response thereto. Each Licensed Product [*] distributed hereunder shall comply with all applicable laws and regulations. [*]; (g) [*]. (h) It will provide Licensor with the date(s) of first use of the Licensed Products in interstate and intrastate commerce, where appropriate; (i) It will, pursuant to Licensor's instructions, duly take any and all necessary steps to secure execution of all necessary documentation for the recordation of itself as user of the - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 24 Licensed Property in any jurisdiction where this is required or where Licensor reasonably requests that such recordation shall be effected. Licensee further agrees that it will at its own expense cooperate with Licensor in cancellation of any such recordation at the expiration of this Agreement or upon termination of Licensee's right to use the Licensed Property. Licensee hereby appoints Licensor its Attorney-in-Fact for such purpose; (j) It will use its best efforts to manufacture, distribute and sell the Licensed Product(s) throughout the Territory; specifically, it shall: (i) Manufacture, distribute and sell the Licensed Product(s) in such price and quality brackets as are required to meet competition by reputable manufacturers of similar articles; (ii) Make and maintain adequate arrangements for the distribution of the Licensed Product(s) throughout the Territory; (iii) Supply said retail outlets with the necessary types of the Licensed Product(s) during the first and final thirds of each calendar year; and (iv) It will not deliver or sell Licensed Product(s) outside the Territory or knowingly sell Licensed Product(s) to a third party for delivery outside the Territory. (k) [*]; (l) If requested by Licensor to do so, it will utilize specific design elements of the Licensed Property provided to Licensee by Licensor on hangtags, labels, and other materials; (m) [*]; (n) [*]. (o) For so long as Perry's services are available to Licensee, Licensee shall allow Perry and Shiny to devote the amount of time reasonably necessary to develop the Licensed Products in compliance with Licensee's obligations hereunder. 15. TERMINATION BY LICENSOR. (a) Licensor shall have the right to terminate this Agreement without prejudice to any rights that it may have, whether pursuant to the provisions of this Agreement, at law, in equity, or otherwise, upon the occurrence of any one or more of the following events (herein called "defaults"): (i) Licensee materially defaults in the performance of any of its obligations provided for in this Agreement; or (ii) Licensee shall have failed to deliver to Licensor or to maintain in full force and effect the insurance referred to in Paragraph 8(b) hereof; or - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 25 (iii) Licensee shall fail to make any payment due hereunder [*]; or (iv) Licensee shall fail to deliver any of the statements hereinabove referred to or to give access to the [*] license records pursuant to the provisions hereof to Licensor's authorized representatives for the purposes permitted hereunder, and such failure shall continue for [*] days after written notice thereof is sent by Licensor to the Licensee; or (v) Licensee shall fail to comply with any laws or regulations as provided in Paragraph 14(f) hereof or any governmental agency or other body, office or official vested with appropriate authority finds that the Licensed Products are harmful or defective in any way, manner or form, or are being manufactured, sold or distributed in contravention of applicable laws or regulations, or in a manner likely to cause harm to persons or property, [*]; or (vi) Licensee shall [*] make any assignment for the benefit of creditors, or shall file any petition under the bankruptcy or insolvency laws of any nation, jurisdiction, county or place, or shall have or suffer a receiver or trustee to be appointed for its business or property, or be adjudicated a bankrupt or an insolvent; or (vii) Licensee does not commence in good faith to manufacture, distribute and sell each title on each Platform throughout the Territory on or before its applicable Marketing Date, or thereafter fails to diligently and continuously manufacture, distribute and sell each title on each Platform throughout the Territory. Such default and Licensor's resultant right of termination (or recapture) shall only apply to the specific title and Platform that Licensee fails to distribute in accordance with the foregoing; or (viii) Licensee shall manufacture, sell or distribute, whichever first occurs, any of the Licensed Product(s) without the prior written approval of Licensor as provided in Paragraph 10 hereof; or (ix) [*]; or (x) Licensee uses Artwork which has not been approved by Licensor in compliance with the provisions of Paragraph 10 hereof; or (xi) [*]; or (xii) Licensee delivers or sells Licensed Products outside the Territory or knowingly sells Licensed Products(s) to a third party who Licensee knows intends to, or who Licensee reasonably should suspect intends to, sell or deliver such Licensed Products outside the Territory; or (xiii) [*]; or (xiv) [*]; or (xv) [*]. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 26 (b) In the event any of these defaults occur, Licensor shall give notice of termination in writing to Licensee by facsimile and certified mail. Licensee shall have [*] days from the date of giving notice in which to correct any of these defaults and [*] days for payment [*], and failing such, this Agreement shall thereupon immediately terminate, and any and all payments then or later due from Licensee hereunder (including Guaranteed Consideration) shall then be promptly due and payable in full [*]. Notwithstanding anything to the contrary set forth in this Agreement, Licensor shall refund to Licensee the applicable Additional Consideration received by Licensor, as and to the extent provided in Paragraph 4(b)(v), above. (c) In the event of any default by Licensor hereunder, Licensor shall have [*] days from the date of notice from Licensee in which to cure such default. Licensee shall have the right to terminate this Agreement without prejudice to any other rights which it may have, whether pursuant to the provisions of this Agreement, or otherwise at law or in equity, if Licensor defaults in the performance of any of its obligations provided for in this Agreement or in the event of a material breach by Licensor of its warranties or representations set forth in this Agreement. In the event any such default occurs, Licensee shall give notice of termination in writing to Licensor by certified mail. Licensor shall have [*] and failing such correction, this Agreement shall thereupon immediately terminate, [*]. 16. FINAL STATEMENT UPON TERMINATION OR EXPIRATION. Licensee shall deliver, as soon as practicable, but not later than thirty (30) days following expiration or termination of this Agreement, a statement indicating the number and description of Licensed Products on hand together with a description of all advertising and promotional materials relating thereto. Following expiration or termination of this Agreement, Licensee shall immediately cease any and all manufacturing of the Licensed Product. However, if Licensee has complied with all the terms of this Agreement, including, but not limited to, complete and timely payment of the Guaranteed Consideration and Royalty Payments, then Licensee may continue to distribute and sell its remaining inventory, on a non-exclusive basis only, for a period not to exceed one (1) year following such termination or expiration (the "Sell-Off Period") of the Term that is applicable to the particular Licensed Product, subject to payment of applicable royalties thereon. In no event, however, may Licensee, over any ninety (90) day period during the Sell-Off Period, distribute and sell an amount of Licensed Products that exceeds the average amount of Licensed Products sold during the best consecutive ninety (90) day period during the Term. In the event this Agreement is terminated by Licensor for any reason under this Agreement, Licensee shall be deemed to have forfeited its Sell-Off Period. If Licensee has any remaining inventory of the Licensed Products following the Sell-Off Period, Licensee shall, at Licensor's option, make available such inventory to Licensor for purchase at or below cost, deliver up to Licensor for destruction said remaining inventory or furnish to Licensor an affidavit attesting to the destruction of said remaining inventory. Licensor shall have the right to conduct a physical inventory in order to ascertain or verify such inventory and/or statement. In the event that Licensee refuses to permit Licensor to conduct such physical inventory, Licensee shall forfeit its right to the Sell-Off Period hereunder or any other rights to dispose of such inventory. In addition to the forfeiture, Licensor shall have recourse to all other legal remedies available to it. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 27 17. PAYMENTS AND NOTICES; RELATIONSHIP OF THE PARTIES. Except as otherwise specifically provided herein, all notices which either party hereto is required or may desire to give to the other shall be given by addressing the same to the other at the address set forth above, or at such other address as may be designated in writing by any such party in a notice to the other given in the manner prescribed in this paragraph. All such notices shall be sufficiently given when the same shall be deposited so addressed, postage prepaid, in the United States mail and/or when the same shall have been delivered, so addressed, by facsimile or by overnight delivery service and the date of transmission by facsimile, receipt of overnight delivery service or two business days after mailing shall for the purposes of this Agreement be deemed the date of the giving of such notice. This Agreement does not constitute and shall not be construed as constitution of a partnership or joint venture between Licensor and Licensee. Neither party shall have any right to obligate or bind the other party in any manner whatsoever, and nothing herein contained shall give, or is intended to give, any rights of any kind to any third persons. 18. NO SUBLICENSING/NON-ASSIGNABILITY. This Agreement shall bind and inure to the benefit of Licensor, its successors and assigns. This Agreement is personal to Licensee. Licensee shall not sublicense, franchise or delegate to third parties its rights hereunder (except as set forth in Paragraph 11(b) hereof). Neither this Agreement nor any of the rights of Licensee hereunder shall be sold, transferred or assigned by Licensee and no rights hereunder shall devolve by operation of law or otherwise upon any receiver, liquidator, trustee or other party. 19. BANKRUPTCY RELATED PROVISIONS. (a) The parties hereby agree and intend that this Agreement is an executory contract governed by Section 365 of the Bankruptcy Code. (b) In the event of Licensee's bankruptcy, the parties intend that any royalties payable under this Agreement during the bankruptcy period be deemed administrative claims under the Bankruptcy Code because the parties recognize and agree that the bankruptcy estate's enjoyment of this Agreement will (i) provide a material benefit to the bankruptcy estate during its reorganization and (ii) deny Licensor the benefit of the exploitation of the rights through alternate means during the bankruptcy. (c) The parties acknowledge and agree that any delay in the decision of trustee of the bankruptcy estate to assume or reject the Agreement (the "Decision Period") materially harms Licensor by interfering with Licensor's ability to alternatively exploit the rights granted under this Agreement during a Decision Period of uncertain duration. The parties recognize that arranging appropriate alternative exploitation would be a time consuming and expensive process and that it is unreasonable for Licensor to endure a Decision Period of extended uncertainty. Therefore, the parties agree that the Decision Period shall not exceed [*] days. Notwithstanding the foregoing, - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 28 nothing herein shall prohibit Licensor from seeking relief from a bankruptcy court at any time, including during such [*] day period. (d) Licensor, in its interest to safeguard its valuable interests (including, without limitation, its intellectual property rights in the Licensed Property), has relied on the particular skill and knowledge base of Licensee, for, among other reasons, those set forth in Paragraph 1(j) above. Therefore, the parties acknowledge and agree that in a bankruptcy context this Agreement is a license of the type described by Section 365(c)(1) of the Bankruptcy Code and may not be assumed by a bankruptcy trustee or assigned without the prior written consent of the Licensor. 20. CONSTRUCTION. This Agreement shall be construed in accordance with the laws of the State of California of the United States of America without regard to its conflicts of laws provisions. 21. WAIVER, MODIFICATION, ETC. No waiver, modification or cancellation of any term or condition of this Agreement shall be effective unless executed in writing by the party charged therewith. No written waiver shall excuse the performance of any acts other than those specifically referred to therein. The fact that the Licensor has not previously insisted upon Licensee expressly complying with any provision of this Agreement shall not be deemed to be a waiver of Licensor's future right to require compliance in respect thereof and Licensee specifically acknowledges and agrees that the prior forbearance in respect of any act, term or condition shall not prevent Licensor from subsequently requiring full and complete compliance thereafter. If any term or provision of this Agreement is held to be invalid or unenforceable by any court of competent jurisdiction or any other authority vested with jurisdiction, such holding shall not affect the validity or enforceability of any other term or provision hereto and this Agreement shall be interpreted and construed as if such term or provision, to the extent the same shall have been held to be invalid, illegal or unenforceable, had never been contained herein. Headings of paragraphs herein are for convenience only and are without substantive significance. 22. CONFIDENTIALITY. The Artwork and the materials and information supplied to one party by the other hereunder constitute, relate to, contain and form a part of confidential and proprietary information of the disclosing party, including, but not limited to, Style Guides, design elements, character profiles, unpublished copyrighted material, release dates, marketing and promotional strategies, information about new products, properties and characters, computer code (if any), the terms and conditions of this Agreement, and other information which is proprietary in nature or is a trade secret (collectively, the "Proprietary Information"). The Proprietary Information is highly confidential and disclosure of the Proprietary Information will result in serious harm to the owner thereof. Among other damage, unauthorized disclosure of the Proprietary Information will (i) damage carefully planned marketing strategies, (ii) reduce interest in the Licensed Property, (iii) make unique or novel elements of the Licensed Property susceptible to imitation or copying by competitors, infringers or third parties prior to Licensor's release of the information or materials, (iv) damage proprietary protection in undisclosed or unpublished information or materials, and (v) provide unauthorized third parties with - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 29 materials capable of being used to create counterfeit and unauthorized merchandise, audio-visual products or other products, all of which will seriously damage the parties' rights and business. Except as expressly approved in writing by the owner of the Proprietary Information, the other party shall not reproduce or use the Proprietary Information of the other party and shall not discuss, distribute, disseminate or otherwise disclose the Proprietary Information or the substance or contents thereof, in whole or in part, in its original form or in any other form, with or to any other person or entity other than employees of the parties and, in the case of Licensee, third parties who have executed a Contributor's Agreement (as provided in Paragraph 9(b)) or third party manufacturer's agreement (as provided in Paragraph 11(b)) and been approved by Licensor as provided hereunder, and such employees and third parties shall be given access to the Proprietary Information only on a "need-to-know" basis. The foregoing restrictions shall not apply to any information which, (i) at the time of disclosure, is in the public domain or which, after disclosure, becomes part of the public domain by publication or otherwise through no action or fault of the receiving party; (ii) information which the receiving party can show was in its possession at the time of disclosure and was not acquired, directly or indirectly, from the other party; (iii) information which was received from a third party having the legal right to transmit the same; (iv) information which is independently developed, conceived, or created without use of or reference to any Proprietary Information of the other party; (v) information which is disclosed pursuant to valid court order or other legal process; or (vi) information that must be disclosed by law or governmental regulation such as in filings with the Securities and Exchange Commission. 23. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement between the parties concerning the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, expressed, implied or statutory, between the parties other than as expressly set forth in this Agreement. 24. ACCEPTANCE BY LICENSOR. This instrument, when signed by Licensee, shall be deemed an application for license and not a binding agreement unless and until accepted by Warner Bros. Consumer Products by signature of a duly authorized officer and the delivery of such a signed copy to Licensee. The receipt and/or deposit by Warner Bros. Consumer Products of any check or other consideration given by Licensee and/or delivery of any material by Warner Bros. Consumer Products to Licensee shall not be deemed an acceptance by Warner Bros. Consumer Products of this application. The foregoing shall apply to any documents relating to renewals or modifications hereof. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 30 IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the day and year first above written. AGREED AND ACCEPTED: AGREED AND ACCEPTED: LICENSOR: LICENSEE: WARNER BROS. CONSUMER PRODUCTS, INTERPLAY ENTERTAINMENT CORP., a division of Time Warner a Delaware corporation Entertainment Company, L.P. By: /S/ GARY R. SIMON By: /S/ BRIAN FARGO ------------------------------ --------------------------------- Gary R. Simon Name: Senior Vice President, Business and Legal Affairs Title: Date: Date: ---------------------------- ------------------------------- - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 31 EXHIBIT 1 #12420-MATR MILESTONES 1 AND 2 (DUE ON OR BEFORE [*]): [*]: [*]. Includes [*], list of [*] and [*]; and [*]: [*] document to be provided detailing the [*], general [*] and [*]. MILESTONE 3 (DUE ON OR BEFORE [*]): [*]: [*], and [*], including [*] including any [*]. MILESTONE 4 (DUE ON OR BEFORE [*]): [*]: [*]. MILESTONE 5 (DUE ON OR BEFORE [*]): [*]: [*]. MILESTONE 6 (DUE ON OR BEFORE [*]): [*]: [*]. MILESTONE 7 (DUE ON OR BEFORE [*]): [*]: [*]. - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 32 EXHIBIT 2 #12420-MATR CONTRIBUTOR'S AGREEMENT I, _______________________, the undersigned ("Contributor"), have been engaged by INTERPLAY ENTERTAINMENT CORP. ("Licensee") to work on or contribute to the creation of Licensed Products, described as ____________________________, by Licensee under an agreement between Licensee and Warner Bros., a division of Time Warner Entertainment Company, L.P., c/o Warner Bros. Consumer Products, a division of Time Warner Entertainment Company, L.P. ("Warner") dated ___________________ (the "License Agreement"). I understand and agree that the Licensed Products, and all artwork or other results of my services for Licensee in connection with such Licensed Products ("Work") is a "work made for hire" for Warner and that all right, title and interest in and to the Work shall vest and remain with Warner or Licensee, as specified in the License Agreement. I reserve no rights therein. Without limiting the foregoing, I hereby assign and transfer to Warner all other rights whatsoever, in perpetuity throughout the universe which I may have or which may arise in me or in connection with the Work that is owned by Warner as provided in the License Agreement. I hereby waive all moral rights in connection with such Work together with any other rights which are not capable of assignment. I further agree to execute any further documentation relating to such transfer or waiver or relating to such Work at the request of Warner or Licensee, failing which Warner is authorized to execute same as my Attorney-in-Fact. Nothing contained herein shall be deemed to alter the rights of Warner or Licensee, as specified in the License Agreement, with respect to ownership of the Work. Contributor: By: -------------------------------- signature -------------------------------- print name -------------------------------- address -------------------------------- -------------------------------- country -------------------------------- date - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 33 Warner Bros. Consumer Products: By: -------------------------------- Date: ------------------------------ - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 34 EXHIBIT 3 #12420-MATR WARNER BROS. CONSUMER PRODUCTS 4000 Warner Boulevard Bridge Building 156 South - 4th Floor Burbank, CA 91522 Re: Approval of Third Party Manufacturer Gentlemen: This letter will serve as notice to you that pursuant to Paragraph 11(b) of the License Agreement dated ________________, 2000 between you and INTERPLAY ENTERTAINMENT CORP., we have been engaged as the manufacturer for Licensee in connection with the manufacture of the Licensed Products as defined in the aforesaid License Agreement. We hereby acknowledge that we may not manufacture Licensed Products for, or sell or distribute Licensed Products to, anyone other than Licensee. We are cognizant of the terms and conditions set forth in said License Agreement and hereby agree to observe those provisions of said License Agreement which are applicable to our function as manufacturer of the Licensed Products. It is expressly understood that we are obligated to comply with all local laws, including without limitation, labor laws, wage and hour laws and anti-discrimination laws and that you or your representatives shall, at anytime, have the right to inspect our facilities and review our records to ensure compliance therewith. It is understood that this engagement is on a royalty free basis and that we may not subcontract any of our work without your prior written approval. We understand that our engagement as the manufacturer for Licensee is subject to your written approval. We request, therefore, that you sign in the space below, thereby showing your acceptance of our engagement as aforesaid. Very truly yours, ---------------------------------- manufacturer/company name By: ---------------------------------- signature ---------------------------------- print name ---------------------------------- address ---------------------------------- ---------------------------------- country - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 35 ---------------------------------- date ---------------------------------- product(s) manufacturing AGREED TO AND ACCEPTED: WARNER BROS. CONSUMER PRODUCTS, a Division of Time Warner Entertainment Company, L.P. By: /S/ GARY R. SIMON ------------------------------- Gary R. Simon Senior Vice President, Business and Legal Affairs Date: ----------------------------- - ------------------ * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 36 EX-10 5 exhibit10-44.txt EXHIBIT 10.44 PLAYSTATION(R) 2 CD-ROM/DVD-ROM LICENSED PUBLISHER AGREEMENT This LICENSED PUBLISHER AGREEMENT (the "Agreement" or "LPA"), entered into as of the 1st day of April, 2000 (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 INTERPLAY ENTERTAINMENT CORP., with offices at 16815 Von Karman Ave Irvine, CA 92606 (hereinafter "Publisher"). WHEREAS, SCEA, 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 (collectively referred to herein as "Sony") are designing and developing, and licensing core components of, a computer entertainment system (hereinafter referred to as the "System"). WHEREAS, SCEA has the right to grant licenses to certain SCEA 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 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 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 SCEA" means, as applicable, either Sony Computer Entertainment Inc. in Japan, Sony Computer Entertainment Europe Ltd. in the United Kingdom 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 Products and/or their component parts, which may include manufacturing facilities owned and operated by affiliated companies of SCEA. 1.4 "Development System Agreement" means an agreement entered into between SCEA and a Licensed Publisher, Licensed Developer or other licensee for the sale or license of Development Tools. 1.5 "development Tools" means the PlayStation 2 development tools sold or licensed by SCEA 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 SCEA or an Affiliate of SCEA designed for execution exclusively on the System and which had 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 "Generic Line" means the generic legal attribution line used on SCEA 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". 1.9 "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 SourceBook 2 or in other documentation provided by SCEA or an Affiliate of SCEA to Publisher. 1.10 "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. 1.11 "Level 1 rebate" shall have the meaning set forth in Section 8.4 hereto. INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 1 1.12 "Level 2 Rebate" shall have the meaning set forth in Section 8.4 hereto. 1.13 "Licensed Developer" means any developer that has signed a valid and then current Licensed Developer Agreement. 1.14 "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 SCEA or an Affiliate of SCEA. 1.15 "Licensed Products" means the Executable Software (which may be combined with Executable Software or other Licensed Publisher or Licensed Developers), which shall consist of one product developed for the System or for the original PlayStation game console 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 System or for the original PlayStation game console in a single Unit unless separately agreed with SCEA. 1.16 "Licensed Publisher" means any publisher that has signed a valid and then current Licensed Publisher Agreement. 1.17 "Licensed Publisher Agreement" or "LPA" means a valid an current license agreement for the publication, development, manufacture, marketing, distribution or sale of Licensed Products for the System, fully executed between a Licensed Publisher and SCEA or an Affiliate of SCEA. 1.18 "Licensed Territory" means the United States (including its possessions and territories) and Canada. The Licensed Territory may be modified and/or supplemented by SCEA from time to time pursuant to Section 4.4 below. 1.19 "Licensed Trademarks" means the Trademarks, service marks, trade dress, logos and other icons or indicia designated by SCEA in the SourceBook 2 or other 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. SCEA may amend such Licensed Trademarks from time to time in the SourceBook 2 or other Guidelines or upon written notice to Publisher. 1.20 "Manufacturing Specifications" means specifications setting forth terms relating to the manufacture and assembly of PlayStation 2 Format Discs, Packaging, Printed Materials and each of their component parts, which shall be set forth in the SourceBook 2 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. 1.21 "Master Disc" means a recordable CD-ROM or DVD-ROM disc in the form requested by SCEA containing final pre-production Executable Software for a Licensed Product. 1.22 "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 PlayStation 2 Format Discs. 1.23 "PlayStation 2 Format Discs" means the uniquely marked or colored CD-ROM or DVD-ROM discs formatted for use with the System which, for purposes of this Agreement, are manufactured on behalf of Publisher and contain Licensed Products or SCEA Demo Discs. 1.24 "Printed Materials" means all artwork and mechanicals set forth on the disc label of the PlayStation Disc 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. 1.25 "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. 1.26 "Product Proposal" shall have the meaning set forth in Section 5.2.1 hereto. 1.27 "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 or 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. 1.28 "Publisher Intellectual Property Rights" means those intellectual property rights, including but not limited to patents and other patent rights, copyrights, trademarks, INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 2 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 right of Publisher required to necessary under this Agreement. 1.29 "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. 1.30 "SCEA Demo Disc" means any demonstration disc developed and distributed by SCEA. 1.31 "SCEA Established Third Party Demo Disc Programs" means (i) any consumer or trade demonstration disc program specified in the SourceBook 2, and (ii) any other third party demo disc program established by SCEA for Licensed Publishers. 1.32 "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 proprietary or intellectual property right throughout the universe, which are required to ensure compatibility with the System or which pertain to the Licensed Trademarks. 1.33 "SCEA Product Code" means the product identification number assigned to each Licensed 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 PlayStation Disc relating to each Licensed Product, as well as on most communications between SCEA and Publisher as a mode of Identifying the Licensed Product other that by title. 1.34 "Sony 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 SCEA, which are provided or supplied by SCEA or an Affiliate or SCEA to Publisher or any Licensed Developer and/or other Licensed Publisher. For purposes of this Agreement, Sony Materials shall not include any hardware portions of the Development Tools, but shall include firmware in such hardware. 1.35 "SourceBook 2" means the PlayStation 2 SourceBook (or any other reference guide containing information similar to the SourceBook 2 but designated with a different name) prepared by SCEA, which is provided separately to Publisher. The SourceBook 2 is designed to serve as the first point of reference by Publisher in every phase of the development, approval, manufacture and marketing of Licensed Products. 1.36 "Standard Rebate" shall mean [*]. 1.37 "Third Party Demo Disc" means any demo disc developed and marketed by a Licensed Publisher, which complies with the terms of an SCEA Established Third Party Demo Disc Program. 1.38 "Unit" means an individual copy of a Licensed Product title regardless of the number of PlayStation 2 Format Discs constituting such Licensed Product Title. 1.39 "Wholesale Price" or "WSP" shall mean the greater of (i) the first published price of the Licensed Product offered to retailers by Publisher as evidenced by a sell sheet or price list issued by Publisher, or (ii) the actual price paid by retailers upon the first commercial shipment of a Licensed 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 Products using Sony Materials, which right shall be limited to the following rights and other rights set forth in, and in accordance with the terms of the 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 SCEA's right of approval as provided herein; (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. INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 3 2.2 SEPARATE PLAYSTATION AGREEMENTS. Unless specifically set forth in this Agreement, all terms used herein are specific to the System and the third party licensing program related thereto and not to the original PlayStation game console or third party licensing program related thereto. Licenses relating to the original PlayStation game console are 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 System and vice versa. 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 SCEA or its designated agent, pursuant to a separate Development System Agreement with SCEA, to assist in such development. 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 used 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 Sony 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 Products, provided that such third party is: (i) a Licensed Publisher, (ii) a Licensed 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 thirty (30) 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 Sony 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 Sony Materials, in whole or in part, 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 Sony 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 Tolls 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 Sony 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 Sony 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 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 SCEA on any of Publisher's products utilizing any Sony 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 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 Products for use on the System, in such formats as may be designated by SCEA. 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 know 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 INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 4 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 SONY MATERIALS AND SCEA INTELLECTUAL PROPERTY RIGHTS. Publisher shall not make use of any Sony 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, Sony 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 right 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 SCEA. 4.3 RESERVATION OF PUBLISHER'S RIGHTS. Separate and apart from Sony 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 right sin 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 Sony Materials) for any hardware platform or service other than the System, 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 right, 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 know ore 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, 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 or 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 Products, and retrieve any Development Tools located, in any such deleted country. Publisher shall cease distributing Licensed Products, and retrieve any Development Tools, directly or through subcontractors, by the end of the period stated in such notice. 4.5 SOURCEBOOK 2 REQUIREMENT. Publisher shall be required to comply with all the provisions of the SourceBook 2, including without limitation the Technical Requirements Checklist therein, when published, or within a commercially reasonable time following its publication to incorporate such provision, 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 SCEA's prior written approval, which shall not be unreasonably withhold 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 Product to review such Licensed Product to ensure that it meets SCEA'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 SCEA 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 SCEA's right sunder this Agreement. In addition, INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 5 SCEA'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 SUBMISSIONS OF PRODUCT PROPOSAL. Publisher shall submit to SCEA for SCEA'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 the SourceBook 2, as well as any additional information that SCEA may deem to be useful in evaluating the proposed Licensed 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 "Approved" to "Not Approved". Such conditions shall have the meanings ascribed to them in the SourceBook 2, and may be changed from time to time by SCEA. 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. 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 of such Licensed 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 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 Product. In the event that Publisher licenses a proposed Licensed Product from another Licensed Publisher or a Licensed Developer, it shall immediately notify SCEA of such change and must re-submit such Licensed 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 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 SCEA and mutually agree on a framework for the review of such Licensed Product throughout the development process ("Review Process"). Once the Review Process ahs begun, Publisher shall be responsible for submitting work-in-process to SCEA in accordance with such Review Process. 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. SCEA 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 SCEA or is not successfully met after a reasonable sure 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 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 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 Product at any stage of the review process, or making material changes to the Licensed 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 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 INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 6 disapproved, SCEA shall specify in writing the reasons for such disapproval and state what corrections 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 SourceBook 2 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 SourceBook 2 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 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 SCEA. 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 SCEA, 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 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 our 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 he necessary corrections to any disapproved Printed Materials, Publisher must submit new Printed Materials for approval by SCEA. SCEA shall not unreasonable 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 or any Licensed Trademarks; (iii) appropriate references of any required notices; and (iv) appropriate 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 Product, Publisher shall be required to deliver to SCEA 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 SCEA. 5.6.2 FAILURE TO COMPLY; THREE 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 "THREE STRIKES" PROGRAM OUTLINED IN THE SOURCEBOOK 2. FAILURE TO OBTAINER SCEA'S APPROVAL OF ADVERTISING MATERIALS COULD RESULT IN TERMINATION OF THIS LPA OR TERMINATION OF APPROVAL OF THE LICENSED 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 INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 7 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 System or to the Licensed Trademarks on such Advertising Materials as may, in Publisher's judgment, promote the sale of Licensed Product. 5.7 RATING REQUIREMENTS. If required by SCEA or any governmental entity, Publisher shall submit each Licensed Product to a consumer advisory ratings system designated by SCEA 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 Licensed Product and in the associated Printed Materials and Advertising Materials, at Publisher's cost and expense, in accordance with the SourceBook 2 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 Product, or in the event that SCEA identifies any improper use of its Licensed Trademarks or Sony Materials with respect to the Licensed Product, or any such material defects or improper use are brought to the attention of SCEA, Publisher shall, at not cost to SCEA, promptly correct any such material defects, or improper use of Licensed Trademarks or Sony Materials, to SCEA's commercially reasonable satisfaction, which may include, if necessary in SCEA'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 Unites 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 SCEA 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, 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 PlayStation 2 Format Discs for Publisher; (b) manufacture Publisher's Packaging and/or Printed Materials; and/or (c) assemble the PlayStation 2 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 System or Licensed Trademarks into each unit. 6.1.1 MANUFACTURE OF PLAYSTATION 2 FORMAT DISCS. 6.1.1.1 DESIGNATED MANUFACTURING FACILITIES. To insure compatibility of the PlayStation 2 Format Discs with the System, consistent quality of the Licensed Product and incorporation of anti-piracy security systems, SCEA shall designate and license a Designated Manufacturing Facility to reproduce PlayStation 2 Format Discs. Publisher shall purchase all of its requirements for PlayStation 2 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 CD-ROM OR DVD-ROM. 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 SourceBook 2. A Designated Manufacturing Facility shall create from one of the fully approved Master Discs provided by Publisher the original master CD-ROM or DVD-ROM, from which all other copies of the Licensed 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 no 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. INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 8 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 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 b 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 System. 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 Products, SCEA may designate and license a Designated Manufacturing Facility to reproduce proprietary Packaging for the System. If SCEA creates Proprietary Packaging, then Publisher shall purchase all 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 for the System, 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 form a Designated Manufacturing Facility). Publisher shall assume all responsibility for the creation f 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 reasonable specified by SCEA from time to time and will apply such labels to each Unite of he Licensed 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, for SCEA's approval with respect to the quality thereof. SCEA shall have the right to disapprove any Packaging that does not comply with the Manufacturing Specifications. Manufacturing Specifications for Packaging shall be comparable to manufacturing specifications applied by SCEA to its own software products of the System. 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 Products, then the Designated Manufacturing Facility shall ship the component parts of the Licensed Product to a destination provi8ded 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 Products are being assembled in accordance with SCEA's quality standards. SCEA may require that Publisher recall any Licensed Products that do not contain proprietary labels or other materials 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 Products ordered hereunder shall be provided to Publisher by the Designated Manufacturing Facility. Purchase shall be subject to the terms an conditions set out in any purchase order form supplied to Publisher by the Designated Manufacturing Facility. INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 9 6.2.2 ORDERS. Publisher shall issue to a Designated Manufacturing Facility a written Purchase Order(s) in the form set forth 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 withhold or delayed. Purchase orders issued by Publisher to a Designated Manufacturing Facility for each Licensed 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 hereto for each Unit of Licensed 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 SourceBook 2. 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 Products and each invoice will be payable within thirty (30) days of the date of the invoice. Any overdue sums shall bear interest at the 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 when payment first became due to and including eh 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 and/or assembly services are obtained from alternate sources. Each shipment to Publisher shall constitute a separate sale, whether said shipment be whole or partial fulfillment of any order. Nothing in this Agreement shall excuse or be construed as a waiver of Publisher's obligation to timely provide any and all payments owed to SCEA and Designated Manufacturing Facility. 6.3 DELIVERY OF LICENSED PRODUCTS. Neither SCEA nor any Designated Manufacturing Facility shall have an obligation to store completed Unites of Licensed Products. Publisher may either specify a mode of delivery or allow Designated Manufacturing Facility to select a mode of delivery. 6.4 OWNERSHIP OF MASTER DISCS. Due to the proprietary nature of the mastering-process, neither SCEA nor a Designated Manufacturing Facility shall under any circumstances release any original master CD-ROM, Master Discs or other in-process materials to Publisher. All such materials shall be and remain the sole property of SCEA or Designated Manufacturing Facility. Notwithstanding the foregoing, Publisher Intellectual Property Rights contained in Product Software that is contained in such in-process materials is, as between SCEA and Publisher, the sole and exclusive property of Publisher or its licensors (other than SCEA an/or its affiliates). 7. MARKETING AND DISTRIBUTION. 7.1 MARKETING GENERALLY. In accordance with the provisions of this Agreement and at no expense to SCEA, 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 SCEA, at no additional cost, for SCEA's internal use, five hundred and four (504) sample copies of each Licensed Product. Publisher shall pay any manufacturing costs to the Designated Manufacturing Facility in accordance with Section 6.2, but shall not be obligated to pay royalties, in connection with such sample Units. In the even that Publisher assembles any Licensed Product using an alternate source, Publisher shall be responsible for shipping such sample Unites to SCEA at Publisher's cost and expense. SCEA shall not directly or indirectly resell any such sample copies of the Licensed Products without Publisher's prior written consent. SCEA may give sample copies to its employees, provided that it uses its reasonable efforts to ensure that such copies are not sold into the retain market. In addition, subject to availability, Publisher shall sell to SCEA additional quantities of INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 10 Licensed Products a the Wholesale Price for such Licensed Product. Any changes to SCEA's policy regarding sample Unites shall be set forth in the SourceBook2. 7.3 MARKETING PROGRAMS OF SCEA. From time to time, SCEA 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 even Publisher elects to participate, all materials submitted by Publisher to SCEA shall be submitted subject to Section 10.2 hereunder and delivery of such materials to SCEA shall constitute acceptance by Publisher of the terms of the offer. Moreover, SCEA may use the Generic Line on all multi-product marketing materials, unless otherwise agreed in writing. 7.4 DEMONSTRATION DISC PROGRAMS. SCEA may, from time to time, provide opportunities for Publisher to participate in SCEA Demo Disc Programs. In addition, SCEA may, from time to time, grant to Publisher the right to create Third Party Demo Discs pursuant to SCEA 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 SourceBook 2 or in other documentation to be provided by SCEA to Publisher. Except as otherwise specifically set forth herein, in the SourceBook 2 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 SCEA Demo Discs and Third Party Demo Discs: 7.4.1 SCEA DEMO DISCS. 7.4.1.1 LICENSE. SCEA may, but shall not be obligated to, invite Licensed Publishers to participate in any SCEA Demo Disc program. Participation by Publisher in an SCEA Demo Disc program shall be optional. If Publisher elects to participate in an SCEA Demo Disc Program and provides Product Information to SCEA in connection thereto, Publisher shall thereby grant to SCEA 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 SCEA Demo Disc program. In addition, Publisher shall grant SCEA the right to feature Publisher and Licensed Product names in SCEA Demo Disc Advertising Materials and to use copies of screen displays generated by the code, representative video samples or other Product Information in such SCEA Demo Disc Advertising Materials. All decisions relating to the selection of first and third party Product Information and all other aspects of SCEA Demo Discs shall be in the sole discretion of SCEA. 7.4.1.2 SUBMISSION AND APPROVAL OF PRODUCT INFORMATION. Upon receipt of written notice that SCEA has tentatively chosen Publisher's Product Information for inclusion in the SCEA Demo Disc, Publisher shall deliver to SCEA such requested Product Information by no later than the deadline set forth in such notice. Separate notice will be sent for each SCEA Demo Disc, and Publisher must sign each notice prior to inclusion in such SCEA demo Disc. Publisher shall include its own Legal Copy on the title screen or elsewhere in the Product Information submitted to SCEA. SCEA shall only provide the Generic Line on the SCEA Demo Disc title screen and packaging. Publisher's Product Information shall comply with SCEA's technical specifications provided to Publisher. SCEA reserves the right to review and test the Product Information provided and request revisions prior to inclusion on the SCEA Demo Disc. If SCEA 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 SCEA, but not later than the deadline for receipt of Product Information. Failure to make such changes and provide the modified Product Information to SCEA by the deadline shall result in the Product Information being removed from the SCEA Demo Disc. Costs associated with preparation of Product Information supplied to SCEA shall be borne solely by Publisher. Except as otherwise provided in this Section, SCEA shall not edit or modify Product Information provided to SCEA by Publisher without Publisher's consent, not to be unreasonably withheld. SCEA shall have the right to use subcontractors to assist in the development of any SCEA Demo Disc. With respect to Product Information provided by Publisher in demo form, the demo delivered to SCEA 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. 7.4.1.3 NO OBLIGATIONS TO PUBLISH. Acceptance of Product Information for test and review shall not be deemed confirmation that SCEA shall include the Product Information on an SCEA Demo Disc, nor shall it constitute approval of any other element of the Licensed Product. SCEA reserves the right to choose from products submitted from other Licensed Publisher and first party products to determine the products to be included in SCEA Demo Discs, and Publisher's Licensed Products will not INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 11 be guaranteed prominence or preferential treatment on any SCEA Demo Disc. Nothing herein shall be construed as creating an obligation of SCEA to publish Product Information submitted by Publisher in any SCEA Demo Disc, nor shall SCEA be obligated to publish, advertise or promote any SCEA Demo Disc. 7.4.1.4 SCEA DEMO DISCS SOLD AT RETAIL. Publisher is aware and acknowledges that certain SCEA Demo Discs may be distributed and sold by SCEA in the retain market. If Publisher elects to participate in any SCEA Demo Disc program which is sold in the retain market as notified by SCEA to Publisher, Publisher acknowledges prior to participation in any such SCEA Demo Disc that it is aware of no limitations regarding Product Information provide to SCEA pursuant to the terms of this Agreement which would in any way restrict SCEA's ability to distribute or sell such SCEA Demo Disc at retail, nor does Publisher or its licensors (other than SCEA and/or its affiliates) have any anticipation of receiving any compensation from such retain sales. In the event that SCEA institutes a SCEA Demo Disc in which a fee and/or royalty is charged to Publisher, SCEA and Publisher will enter into a separate agreement regarding such SCEA Demo Disc. 7.4.2 THIRD PARTY DEMO DISCS. 7.4.2.1 LICENSE. Publisher may participate in any SCEA Established Third Party Demos Disc Program. Publisher shall notify SCEA of its intention to participate in any such program, and upon receipt of such notice, SCEA 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 SCEA Established Third Party Program or otherwise permitted by SCEA, to sell) such Third Party Demo Discs in accordance with the SourceBook 2, which may be modified from time to time at the sole discretion of SCEA. Unless separately agreed in writing with SCEA, Third Party Demo Discs shall not be used, distributed, promoted, bundled or sold in conjunction with other products. In addition, SCEA 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 SCEA Established Third Party Demo Disc Program is specified by SCEA 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 SCEA 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 SCEA, for SCEA's prior approval, a final version of each Third Party Demo Disc in a format prescribed by SCEA. Such Third Party Demo Disc shall comply with all requirements provided to Publisher by SCEA in the SourceBook 2 or otherwise. In addition, SCEA shall evaluate the Third Party Demo Disc in accordance with the approval provisions for Executable Software and Printed Materials set forth in Section s 5.4 and 5.5, respectively. Furthermore, Publisher shall obtain the approval of SCEA 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 SCEA 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 of the related Licensed Product. Unless otherwise permitted by SCEA, 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 of 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 (and if permitted by SCEA, sale) of the Third Party Demo Disc shall be deducted from any amounts payable to SCEA hereunder. Royalties on Third Party Demo Discs shall be as provided in Section 8.2. 7.5 CONTESTS AND SWEEPSTAKES OF PUBLISHER. SCEA acknowledges that, from time to time, Publisher may conduct contests and sweepstakes to promote Licensed Products. SCEA shall permit Publisher to include contests 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 INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 12 for all aspects of such contest or sweepstakes; (ii) Publisher warrants that each contest, sweepstakes, and promotion, comply with local, state and federal 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 SCEA 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 SCEA 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 SCEA of such contest or sweepstakes, nor shall such acceptance be construed as SCEA having reviewed and approved such materials for compliance with any federal or state 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 SCEA 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 SourceBook 2. Publisher shall provide SCEA with such Product Information for each Licensed Product upon submission of Printed materials to SCEA 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 SCEA in updates to the SourceBook 2. 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 SCEA with advance written notice of such election, the name of the Licensed Publisher and any additional information requested by SCEA 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 Territory. 8. ROYALTIES. 8.1 APPLICABLE ROYALTIES ON LICENSED PRODUCTS. 8.1.1 INITIAL ORDERS. Publisher shall pay SCEA, either directly or through its designee, a per title royalty in United States dollars for each Unit of the Licensed Products manufactured based on the initial Wholesale Price of the Licensed Product, as follows: WHOLESALE PER TITLE ROYALTY PRICE - ----------- --------------- -------------------- Band 1 [*] [*] Band 2 [*] [*] Band 3 [*] [*] Band 4 [*] [*] Band 5 [*] [*] - ---------- --------------- -------------------- In absence of satisfactory evidence to support the WSP, the royalty rate that shall apply will be [*] per Unit. 8.1.2 REORDERS AND OTHER PROGRAMS. 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 or reorder, except in the event that the Wholesale Price increases for such Licensed Product, in which case the royalty shall be adjusted upwards to reflect the higher Wholesale Price. Licensed Products qualifying for SCEA's "Greatest Hits" programs or other programs offered by SCEA shall be subject to the royalties applicable for such programs. Publisher acknowledges that as of the date of execution of this Agreement no "Greatest Hits" program exists for the INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 13 PlayStation 2 Third Party licensing program. 8.2 THIRD PARTY DEMO DISC PROGRAM ROYALTIES: Publisher shall pay SCEA a per Unit royalties in United States dollars of [*] for each Third Party Demo Disc Unit manufactured. The quantity of Units ordered shall comply with the terms of such SCEA Established Third Party Demo Disc Program. 8.3 PAYMENT. Payment of royalties under Sections 8.1 and 8.2 shall be made to SCEA through it Designated Manufacturing Facility concurrent with the placement of an order to manufacture Licensed Product and payment of manufacturing costs in accordance with the terms and conditions set forth in Sections 6.2.3, Unless otherwise agreed in writing with SCEA. At the time of placing an order to manufacture a Licensed Product, Publisher shall submit to SCEA 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 SCEA. In addition, Publisher shall submit to SCEA prior to placing the initial order for each Licensed Product a separate certification, in the form provided by SCEA in the SourceBook 2, signed by officers or Publisher that certifies that he Wholesale Price provided to SCEA is accurate and attaching such documentation supporting the WSP as requested by SCEA. Payment shall be made prior to manufacture unless SCEA has agreed to extend credit terms to Publisher in writing pursuant to Section 6.2.3.3. Nothing herein shall be construed as requiring SCEA to extend credit terms to Publisher. The accounting statement sue hereunder shall be subject to the audit and accounting provisions set forth in paragraph 16.2 below. No costs incurred in the development, manufacture, marketing, sale and/or distribution of the Licensed Products shall be deducted from any royalties payable to SCEA hereunder. Similarly, there shall be no deduction from the royalties otherwise owed to SCEA hereunder as a result of any uncollectible accounts owed to Publisher, or 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, fees, assessments or expenses of any kind which may be incurred by Publisher in connection with the 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 SCEA 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 SCEA hereunder; provided, however, that SCEA shall not manufacture Licensed Products outside of the United States without the prior consent of Publisher. Publisher shall provide SCEA with official tax receipts or other such documentary evidence issued by the applicable tax authorities sufficient to substantiate that any such taxes or assessments shave in fact been paid. 8.4 REBATE PROGRAMS. Publisher shall be eligible to participate in one of three rebate programs offered by SCEA: the Standard Rebate program, the Level 1 Rebate program, or the Level 2 Rebate program. If Publisher qualifies for such rebates as set forth herein, rebates shall be credit to Publisher's accounts as provided below: UNITS ORDERED STANDARD LEVEL 1 LEVEL 2 - -------------- ---------- ---------- ----------- [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] 8.4.1 STANDARD REBATE PROGRAM. All Publishers qualify for the Standard Rebate program. Rebates will be offered on an individual title basis. Rebates will be given to any individual Licensed Product that exceeds the above numbers or Units during the first year after first commercial shipment of such Licensed Product. The rebate in effect at the end of such year for the Licensed Product will remain in effect for as long as Publisher continues to sell such Licensed Product, but Publisher will not receive further rebates if sales of such Licensed Product hit additional thresholds as specified above after such year. The Standard Rebate may not be used in conjunction whit a Third Party Demo Disc program or any promotional program of SCEA, with Licensed Products that qualify for any "Greatest Hits" program of SCEA or with Licensed Products that qualify for the Brand 1 Royalty. 8.4.2 LEVEL 1 REBATE PROGRAM: To be eligible for the Level 1 Rebate program, Publisher mush ship over [*] Units of certain Licensed Product in a single Fiscal Year. Level 1 Rebates shall be credited to Publisher on an individual title basis. Other terms of the Level 1 Rebate are as follows: INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 14 (i) Only Publisher's titles (as determined below) that meet the following conditions shall count toward [*] Unit threshold: Publisher must order at least [*] Unites of the Licensed Product both within the first year of commercial release of such Licensed Product and during the qualifying Fiscal Year. (ii) Any Licensed Products, including "Greatest Hits" titles and products for the original PlayStation game console, but excluding all demo discs, shall count toward the [*] Unit threshold (provided they meet the conditions set forth in Section 8.4.2(i) above). For purposes of determining Level 1 Rebate thresholds and the conditions set forth in Section 8.4.2(i), full priced Licensed Products and "Greatest Hits" Licensed Products shall be considered separate Licensed Products, with separate Unite minimums and release dates. (iii) Level 1 Rebates shall apply only to Licensed Products (not including "Greatest Hits" titles, Licensed Products qualifying for the Band 1 royalty and products for the original PlayStation game console) ordered in the Fiscal Year following the Fiscal Year in which [*] Unit threshold is met. Units of Licensed Products that qualified Publisher for inclusion in the Level 1 Rebate program in the previous Fiscal Year shall not be entitled to receive the Level 1 Rebate. (iv) Publisher must re-qualify for the Level 1 Rebate Program each Fiscal Year. If a Publisher fails to re-qualify for any Fiscal year, then the Standard Rebate shall apply in such Fiscal year. The Fiscal Year for which a Publisher may qualify for the Level 1 Rebate shall be the Fiscal year ending March 31, 2000, and if the Publisher qualifies for the Level 1 Rebate, it will apply to Licensed Products ordered in the Fiscal Year commencing April 1, 2000. (v) Licensed Products eligible for the Level 1 Rebate program shall not be eligible for Standard Rebates, and Level 1 Rebates shall supersede Standard Rebates with respect to any individual Licensed Product. If a Licensed Product qualifies for the Standard Rebate in one Fiscal year, and Publisher qualifies for the level 1 Rebate in the next Fiscal year, Units of such Licensed Product ordered in the next Fiscal year will receive the Level 1 Rebate commencing on April 1 of the next Fiscal Year going forward, but such Level 1 Rebate will not be credited retroactively to Unites of the Licensed Product ordered in the previous Fiscal year. For example, Publisher orders [*] Units of Product X in Fiscal Year 2001, receiving a Standard Rebate of [*]. Publisher qualifies of the Level 1 Rebate in Fiscal Year 2002. Publisher will receive the Level 1 Rebate of [*] commencing with Units ordered on April 1, 2001, but will not receive a retroactive credit for Units ordered prior to April 1, 2001. When Publisher reaches the [*] Unit threshold, it will receive a retroactive credit of [*] on all Level 1 Rebate Units ordered, as well as a retroactive credit of [*] on Standard Rebate Units ordered in the previous Fiscal Year, and Publisher will receive the Level 1 Rebate of [*] going forward. 8.4.3 LEVEL 2 REBATE PROGRAM: To be eligible for the Level 2 Rebate Program, Publisher must ship over [*] Units of certain Licensed Products in and Fiscal Year. Level 2 Rebates shall be credited to Publisher on an individual title basis. Other terms of the Level 2 Rebate are as follows: (i) Only Publisher's titles (as determined below) that meet the following conditions shall count toward [*] Unit threshold: Publisher must order at least [*] Units of the Licensed Product both within the first year or commercial release of such Licensed Product and during the qualifying Fiscal Year. (ii) Any Licensed Products, including "Greatest Hits" titles and products for the original PlayStation game console, but excluding all demo discs, shall count toward the [*] Unit threshold (provided they meet the conditions set forth in Section 8.4.3(i) above). For purposes of determining Level 2 Rebate thresholds and the conditions set forth in Section 8.4.2(i), full priced Licensed Products and "Greatest Hits" Licensed Products shall be considered separate Licensed products, with separate Unit minimums and release dates. (iii) Level 2 Rebates shall apply only to Licensed Products (not including "Greatest Hits" titles, Licensed Products qualifying for the Band 1 royalty and products of the original PlayStation game console) ordered in the Fiscal Year following the Fiscal Year in which the [*] Unit threshold is met. Units of Licensed Products that qualified Publisher for inclusion in the Level 2 Rebate program in the previous Fiscal Year shall not be entitled to receive the Level 2 Rebate. (iv) Publisher must re-qualify for the Level 2 Rebate Program each Fiscal Year. If Publisher fails to re-qualify for any Fiscal Year then the Standard Rebate or Level 1 Rebate, as the case may be, shall apply in such Fiscal Year. The first Fiscal Year for which a Publisher may qualify for the Level 2 Rebate shall be the Fiscal Year ending March 31, 2000, and if the Publisher qualifies for the Level 2 Rebate, it will apply to Licensed Products ordered in the Fiscal year commencing April 1, 2000. (v) Licensed Products eligible for the Level 2 Rebate program shall not be eligible for Standard Rebates or Level 1 Rebates, and Level 2 Rebates shall supersede INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 15 Standard Rebates and Level 1 Rebates with respect to any individual Licensed Product. If a Licensed Product qualifies for the Standard Rebate or Level 1 Rebate in one Fiscal Year, and Publisher qualifies for the Level 2 Rebate in the next Fiscal yea, Units of such Licensed Product ordered in the next Fiscal year will receive the Level 2 Rebate going forward, but such Level 2 Rebate will not be credited retroactively to Units of the Licensed Product ordered in the previous Fiscal Year. See Section 8.4.2(v) for an example. 8.5 CALCULATION AND USE OF REBATES. Rebate percentages for all rebate programs shall be credited against royalties owed SCEA and shall have no other monetary value. All rebates, whether under the Standard Rebate, Level 1 Rebate or Level 2 Rebate Programs shall be issued by SCEA as a credit to Publisher for use against future royalty payments. It is Publisher's responsibility to inform SCEA when it reaches any rebate threshold. In no event shall Publisher take a deduction off royalties owed SCEA or deduction off an invoice payable to SCEA on current production unless and until SCEA issues a credit to Publisher in writing or unless otherwise agreed in writing. From time to time SCEA may allow Publisher to use credits in other manners on terms and conditions to be determined by SCEA. Publisher may use rebate credits to procure Development Tools. Units of Licensed Products shall be considered "ordered" when Units first begin to ship from a Designated Manufacturing Facility. 8.6 REBATE CREDITS. Subject to Sections 8.4.2(v) and 8.4.3(v), all rebate programs are retroactive, such that Publisher receives a credit for each rebate percentage against previous Units when it reaches the Unit threshold for the next rebate percentage. SCEA shall credit Publisher's account with respect to retroactive rebates as follows: (A) if Publisher's initial order for a Licensed Product is less than any rebate threshold provided above, then SCEA shall retroactively credit Publisher's account sixty (60) days following the date that Publisher notifies SCEA that orders of a Licensed Product exceed any rebate threshold, subject to SCEA's right to confirm such information; and (B) if Publisher's initial order for a Licensed Product reaches or exceeds any rebate threshold provided above, then Publisher may credit the rebate amount set forth above as a separate line item on the Purchase Order with respect to such Licensed Product, subject to SCEA's confirmation right. 9. REPRESENTATIONS AND WARRANTIES. 9.1 REPRESENTATIONS AND WARRANTIES OF SCEA. SCEA represents and warrants solely for the benefit of Publisher that SCEA 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, right of publicity, privacy, performance, moral rights, literary rights and any other third party right; (iii) Publisher has the right, poser and authority to enter into this Agreement to grant SCEA the rights granted hereunder and to fully perform its obligation 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 SCEA in writing; (vi) Publisher has obtained the consent of all holders of intellectual property right required to be obtained in connection with use of any Product Information by SCEA as licensed hereunder, and Product Information when provided to SCEA in accordance with the terms of this Agreement may be published, marketed, distributed and INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 16 sold by SCEA in accordance with the terms and conditions of this Agreement and without SCEA 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 SCEA's behalf, or to the effect that the Licensed Products are connected in any was with SCEA (other than that the Executable Software and/or Licensed Products have been developed, marketed, sold and/or distributed under license from SCEA); (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 SCEA 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 federal, state, provincial, local and foreign laws and any regulations and standards promulgated thereunder (including but not limited to federal and state lottery laws as currently interpreted and enforced) 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 or the Licensed Products shall in no manner reflect adversely upon the name, reputation or goodwill of SCEA; (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 SCEA. 10. INDEMNITIES; LIMITED LIABILITY. 10.1 INDEMNIFICATION BY SCEA. SCEA 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 witnesses and litigation costs, and including costs incurred in the settlement or avoidance of any such claim which result from or are in connection with a breach of any of the representations or warranties provided by SCEA herein; provided, however, that Publisher shall give prompt written notice to SCEA of the assertion of any such claim, and provided, further, that SCEA shall have the right to select counsel and control the defense and settlement thereof. SCEA 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 SCEA. Publisher shall provide SCEA, 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 SCEA's prior written consent. 10.2 INDEMNIFICATION BY PUBLISHER. Publisher shall indemnify and hold SCEA 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 o any of the provisions of this Agreement; or (ii) infringement of a third party's intellectual property rights by 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 any portions thereof) unless due directly to the breach of SCEA in performing any of the specific duties and/or providing any of the specific services required of it hereunder; or (iv) any federal, state or foreign civil or criminal actions relating to the development, marketing, sale and/or distribution of Licensed Products. SCEA 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 SCEA, SCEA shall have the right to select counsel for SCEA 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 INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 17 against Publisher. SCEA shall retain the right to approve any settlement. SCEA shall provide Publisher, at no expense to SCEA, reasonable assistance and cooperation concerning any such matter; and SCEA shall not agree to the settlement of any such claim, action or proceeding (other than third party claims, actions or proceedings against SCEA) without Publisher's prior written consent. 10.3 LIMITATION OF LIABILITY. 10.3.1 LIMITATION OF SCEA'S LIABILITY. IN NO EVENT SHALL SCEA 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 SCEA, 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 EVEN SHALL SCEA'S LIABILITY ARISING UNDER, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY LIABILITY FOR DIRECT OT INDIRECT DAMAGES, AND INCLUDING WITHOUT LIMITATION ANY LIABILITY UNDER SECTION 10.1 HERETO, EXCEED THE TOTAL AMOUNT PAID BY PUBLISHER TO SCEA UNDER THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER SCEA NOR ANY SONY AFFILIATE, NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS SHALL BEAR ANY RISK, OR HAVE ANY RESPONSIBILITY OR LIABILITY, OR ANY KIND TO PUBLISHER OR TO ANY THIRD PARTIES WITH RESPECT TO THE QUALITY, OPERATION AND/OR PERFORMANCE OF ANY PORTION OF THE SONY MATERIALS, THE SYSTEM OR ANY LICENSED PRODUCT. 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 SCEA 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 SCEA, 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 SCEA NOR ITS AFFILIATES AND SUPPLIERS MAKE, NOR DOES PUBLISHER RECEIVE, ANDY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, REGARDING THE SONY MATERIALS, SCEA'S CONFIDENTIAL INFORMATION THE SYSTEM, THE UNITS OF THE LICENSED PRODUCTS MANUFACTURED HEREUNDER AND/OR PUBLISHER'S PRODUCT INFORMATION INCLUDED ON SCEA DEMO DISCS. SCEA 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 B REPRODUCED ON SCEA DEMO DISCS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SCEA ND 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 SONY MATERIALS, SCEA'S CONFIDENTIAL INFORMATION, LICENSED PRODUCTS, SCEA DEMO DISCS AND THE SYSTEM. ANY WARRANTY AGAINST INFRINGEMENT THAT MAY BE PROVIDED IN SECTION 2-312(3) OF THE UNIFORM COMMERCIAL CODE AND/OR IN ANY OTHER COMPARABLE STATUE IS EXPRESSLY DISCLAIMED. INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 18 11. SCEA INTELLECTUAL PROPERTY RIGHTS. 11.1 LICENSED TRADEMARK. The Licensed Trademarks and the goodwill associated therewith are and shall be the exclusive property of SCEA or Affiliates of SCEA. Nothing herein shall give Publisher any right, title or interest in or to any of the Licensed Trademarks or any other trademarks of SCEA, other than the non-exclusive licensed 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 SCEA's rights, title or interest in or to any of the Licensed Trademarks or any other trademarks of SCEA, nor shall Publisher register any trademark in its own name or in the name of any other person or entity, or obtain right to employ Internet domain name or addresses, which are similar to or are likely to be confused with any of the Licensed Trademarks or any other trademarks of SCEA. 11.2 LICENSE OF SONY MATERIALS AND SYSTEMS. All rights with respect to the Sony Materials and System, including without limitation , all of SCEA Intellectual Property Rights therein, are and shall be the exclusive property of SCEA or Affiliates of SCEA. Nothing herein shall five Publisher any right, title or interest in or to the Sony 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 SCEA's rights, title or interests in or to the Sony Materials or the System (or any portion thereof). 12. INFRINGEMENT OF SCEA INTELLECTUAL PROPERTY RIGHTS BY THIRD PARTIES. In the event that Publisher discovers or otherwise becomes aware that any of the SCEA Intellectual Property Rights have been or are being infringed upon by any third party, then Publisher shall promptly notify SCEA. SCEA shall have the sole right, in its discretion, to institute and prosecute lawsuits against third parties for such infringement of SCEA Intellectual Property Rights. Any lawsuit shall be prosecuted solely at the cost and expense of SCEA and all sums recovered in any such lawsuits, whether by judgment, settlement or otherwise shall belong solely to SCEA. Upon request of SCEA, 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. SCEA shall reimburse Publisher for the reasonable expenses incurred as a result of such cooperation, but unless authorized by other provision of this Agreement, not costs and expenses attributable to the conduct of a cross-claim or third part action. 13. CONFIDENTIALITY. 13.1 SCEA'S CONFIDENTIAL INFORMATION. 13.1.1 DEFINITION OF SCEA'S CONFIDENTIAL INFORMATION. "SCEA's Confidential Information" shall mean: (i) the System, Sony Materials and Development Tools; (ii) other documents and materials developed, owned, licensed or under the control of Sony, including all processes, data, hardware, software, inventions, trade secrets, ideas, creations, improvements, designs, discoveries, developments, research and know-how, including without limitation the SourceBook 2 and SCEA Intellectual Property Rights relating to the System, Sony Materials or Development Tools; and (iii) information and documents regarding SCEA's finances, business, marketing and technical plans, business methods and production plans. SCEA'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 anytime during the term of this Agreement. In addition, the existence of a relationship between Publisher and SCEA for the purposes set forth herein shall be deemed to be SCEA's Confidential Information unless otherwise agreed to in writing by the parties or until publicly announced by SCEA. 13.1.2 TERM OF PROTECTION OF SCEA'S CONFIDENTIAL INFORMATION. The term for the protection of SCEA'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 SCEA's Confidential Information continues to be maintained as confidential and proprietary by SCEA 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 SCEA's Confidential Information. 13.1.3 PRESERVATION OF SCEA'S CONFIDENTIAL INFORMATION. Publisher shall, with respect to SCEA's Confidential Information: (i) not disclose SCEA's Confidential Information to any person or entity; other than those employees or directors of the Publisher whose duties justify a "need-to- INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 19 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 SCEA's request, Publisher shall provide SCEA with a copy of such confidentiality agreement between Publisher and its employees or directors, and shall also provide SCEA with a list of employee and director signatories. Publisher shall not disclose any of SCEA's Confidential Information to third parties, including without limitation to consultants or agents. Any employees or directors who obtain access to SCEA's Confidential Information shall be advised by Publisher of the confidential nature of SCEA'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 SCEA's Confidential Information in order to avoid disclosure, publication, or dissemination, using as high a degree of care and scrutiny, but a 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 containing SCEA's Confidential Information be maintained in a restricted access area and plainly marked to indicate the secret and confidential nature thereof. (iv) at SCEA's request, return promptly to SCEA any and all portions of SCEA'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, SCEA'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 SCEA's Confidential Information. 13.1.4 EXCEPTIONS. The foregoing restrictions shall not apply to any portion of SCEA's Confidential Information which: (i) was previously know 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 SCEA'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 SCEA'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 SCEA to give SCEA the maximum opportunity to seek any other legal remedies to maintain such SCEA's confidential Information in confidence as herein provided; or (v) is approved for release by written authorization of SCEA. 13.1.5 NO OBLIGATION TO LICENSE. Disclosure of SCEA's Confidential Information to Publisher shall not constitute any option, grant or license from SCEA to Publisher under any patent or other SCEA Intellectual Property Rights now or hereinafter held by SCEA. The disclosure by SCEA to Publisher of SCEA's Confidential Information hereunder shall not result in any obligation on the part of SCEA to approve any materials of Publisher hereunder or otherwise, nor shall such disclosure by SCEA give Publisher any right to, directly or indirectly, develop, manufacture or sell any product derived from or which uses any of SCEA'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 SCEA's Confidential Information, it shall notify SCEA 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 SCEA to protect SCEA's proprietary rights in any of SCEA'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) or legal action, and reimbursement for all reasonable attorney's fees, costs and expenses incurred by SCEA to protect its proprietary rights in SCEA's Confidential Information. Publisher shall take all steps requested by SCEA to prevent the recurrence of any unauthorized duplication, access, use, possession or knowledge of SCEA's Confidential INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 20 Information. In addition, SCEA 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 by SCEA 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); (ii) other documents and materials developed, owned, licensed or under the control of Publisher, including all processed, 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 SCEA 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. SCEA 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 SCEA 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 SCEA remove any proprietary legend set forth on or contained within any of Publisher's Confidential Information. 13.2.4 EXCEPTIONS. The foregoing restrictions will not apply to any portion of Publisher's Confidential Information which: (i) was previously know to SCEA without restriction on disclosure or use, as proven by written documentation of SCEA; or (ii) is or legitimately becomes part of information in the public domain through no fault of SCEA, its employees or its subcontractors; or (iii) is independently developed by SCEA's employees or affiliates who have not had access to Publisher's Confidential Information, as proven by written documentation of SCEA; or (iv) is required to be disclosed by administrative or judicial action; provided that SCEA attempt 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 (v) is approved for release by written authorization of Publisher. 13.2.5 SCEA'S OBLIGATION UPON UNAUTHORIZED DISCLOSURE. If at any time SCEA becomes aware of any unauthorized duplication, access, use, possession or knowledge of any of Publisher's Confidential Information, it shall notify Publisher as soon INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 21 as is reasonably practicable. SCEA shall provide nay and all reasonable assistance to Publisher to protect Publisher's proprietary right 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 attorney's fees, costs and expenses incurred by Publisher to protect it proprietary rights in Publisher's Confidential Information. SCEA 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 AGREEMENT. The terms and conditions of this Agreement shall be treated as SCEA'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 federal and/or state securities or other 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, 2003, unless earlier terminated pursuant to Section 14.2. The term shall be automatically extended for additional on-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 SCEA'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 SCEA. SCEA 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 obligation hereunder; or (B) any other agreement entered into between SCEA or Affiliates of SCEA and Publisher. (ii) The liquidation or dissolution of Publisher or a statement of intent by Publisher to no longer exercise any of the rights granted by SCEA to Publisher hereunder. (iii) 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 SCEA or an Affiliate of SCEA; (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 SCEA or Affiliates or SCEA concerning any proprietary technology, trade secrets or other SCEA Intellectual Property Rights or SCEA'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. (iv) If during the term of this Agreement, Publisher or an entity that directly or indirectly has a controlling interest in Publisher enters into a business relationship with a third party with whom Publisher materially contributes to develop core components to an interactive device or product which is directly or indirectly competitive with the System. Publisher shall immediately notify SCEA in writing in the event that any of the events or circumstances specified in this Section occur. 14.3 PRODUCT-BY-PRODUCT TERMINATION BY SCEA. In addition to the events of termination described in Section 14.2, above, SCEA, at its option, shall be entitled to terminate, on a product-by-product basis, the licenses and related rights herein granted t Publisher in the event that (a) Publisher fails to notify SCEA promptly in writing of any material change to any materials previously approved by SCEA in accordance with Section 5 or INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 22 Section 6.1 hereto, and such breach is not corrected or cured within (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 obligation to SCEA pursuant to such third party's agreement with SCEA with respect to such Licensed Product; or (d) Publisher cancels a Licensed Product or fails to provide SCEA in accordance with the provision 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 SCEA in strict accordance with the Review Process in Section 5.3. 14.4 OPTIONS OF SCEA 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, SCEA may, at its option and upon written notice to Publisher, take the following actions in lieu of terminating this Agreement. In the event that SCEA elects either of these options, Publisher may terminate this Agreement upon written notice to SCEA rather than allowing SCEA to exercise these options. Election of these options by SCEA shall not constitute a waiver of or compromise with respect to any of SCEA's rights under this Agreement and SCEA may elect to terminate this Agreement with respect to any breach. 14.4.1 SUSPENSION OF AGREEMENT. SCEA 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. 14.4.2 LIQUIDATED DAMAGES. Whereas a minor breach of any of the events set out below may not warrant termination of this Agreement, but will cause SCEA damages in amounts difficult to quantify, SCEA may require Publisher to pay liquidated damages of Twenty Thousand Dollars ($20,000) per event as follows: (i) Failure to submit Advertising Materials to SCEA for approval (including any required resubmissions); (ii) Broadcasting or publishing Advertising Materials without receiving the final approval or consent of SCEA; (iii) Failure to make SCEA's requested revisions to Advertising Materials; or (iv) Failure to comply with the SourceBook 2, Manufacturing Specifications or Guidelines which relates in any way to use of Licensed Trademarks. Liquidated damages shall be invoiced separately or on Publisher's next invoice for Licensed Products. SCEA reserves the right to terminate this Agreement for breach in lieu of seeking liquidated damages or in the event that liquidated damages are unpaid. 14.5 NO REFUNDS. In the event of termination of this Agreement in accordance with any of the provision of Sections 14.2 through 14.4 above, no portion of any payments of any kind whatsoever previously provided to SCEA hereunder shall be owned or be repayable to Publisher. 15. EFFECTS 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 Product o r this Agreement, Publisher shall provide SCEA 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. SCEA 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 SCEA, and Publisher shall cease from any further use of SCEA's Confidential Information, Licensed Trademarks and Sony Materials and any SCEA 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 o Section 13, and provided this Agreement is not terminated due to a breach or default of Publisher, Publisher may retain such portions of Sony Materials and SCEA's Confidential Information as SCEA in its sole discretion agrees are required to support end users of Licensed Products by must return these materials at the end of such one year period. Upon expiration or termination, the licenses and related rights herein granted to SCEA by INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 23 Publisher shall immediately revert to Publisher, and SCEA shall cease from any further use of Product Information and any Publisher Intellectual Property Rights therein; provided that SCEA may continue the manufacture, marketing, sale or distribution of any SCEA 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 f 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 SCEA 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 SONY MATERIALS AND CONFIDENTIAL INFORMATION. Upon the expiration or earlier termination of this Agreement, Publisher shall immediately deliver to SCEA, or if and to the extent requested by SCEA destroy, all Sony Materials and any and all copies thereof, and Publisher and SCEA 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 five (5) working days after any such destruction, Publisher and/or SCEA, 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 Sony 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 Sony Materials or Confidential Information and SCEA must resort to legal means (including without limitation any use of attorneys) to recover the Sony Materials or Confidential Information or the value thereof, all costs, including SCEA's reasonable attorney's fees, shall be borne by Publisher, and SCEA may, in addition to SCEA's other remedies, withhold such amounts from any payment otherwise due from SCEA and Publisher. 15.5 EXTENSION OF THIS AGREEMENT; TERMINATION WITHOUT PREJUDICE. SCEA shall be under no obligation to extend this Agreement notwithstanding any action 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 or 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 SCEA or Publisher, respectively, shall be the mailing address stated in the preamble hereof, or such other address as may by provided by written notice from one party to the other on a least ten (10) days' prior written notice. Any such notice shall be effective upon the date of actual or tendered deliver, 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 materials for a period of twenty-four (24) months after the expiration or earlier termination of this Agreement. Acceptance by SCEA of an accounting statement, purchase order, or payment hereunder will not preclude SCEA from challenging or questioning the accuracy thereof at a later time. In the event that SCEA reasonably believes that the Wholesale Price provided by Publisher with respect to any Licensed is not accurate, SCEA 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 SCEA shall have access to, and the right to make copies and summaries of, such INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 24 portions of all of Publisher's books an records as pertain to the Licensed Products and any payments due or credits received hereunder. In the event that such inspection reveals an under-reporting of any payment due to SCEA, Publisher shall immediately pay SCEA such amount. In the event that any audit conducted by SCEA reveals that Publisher has under-reported any payment due to SCEA hereunder by five percent (5%) or more for that audit period, then in addition to the payment of the appropriate amount due to SCEA, Publisher shall reimburse SCEA for all reasonable audit costs for that audit and any and all collection costs to recover the unpaid amount. 16.3 FORCE MAJEURE. Neither SCEA 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, 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 conditions 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 SCEA 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, SCEA 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 SCEA 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 representations 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. SCEA 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 right hereunder, nor delegate or otherwise transfer any of its obligations hereunder, to any third party unless the prior written consent of SCEA shall first be obtained. This Agreement shall not be assigned in contravention of Section 14.2 (iii). Any attempt or purported assignment, delegation or other such transfer, directly or indirectly, without the required consent of SCEA 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 (iii). SCEA shall have the right to assign any and all of its rights and obligations hereunder to any Sony affiliates(s). 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 SCEA, provided, however, that Publisher may retain those subcontractors who provide services which do not require access to Sony Materials or SCEA'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 SCEA (the "PlayStation 2 Agreement") in full force and effect throughout the term of such development and marketing; or (ii) an SCEA-approved subcontractor agreement ("Subcontractor Agreement"); and SCEA has approved such subcontractor in writing, which approval shall be in SCEA's sole discretion. Such Subcontractor Agreement shall provide that SCEA 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 SCEA prior to and following execution thereof. Publisher shall not disclose to any subcontractor any of SCEA's Confidential information, including, without limitation, any Sony Materials, unless and until either a PlayStation 2 Agreement or a Subcontractor Agreement has been executed and approved by SCEA. Notwithstanding any consent which may be granted by SCEA 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 provision 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 INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 25 and conditions of this Agreement, and hereby unconditionally guarantees all obligations of its subcontractors. SCEA may subcontract any of its right 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 part or relating to or in any way affecting this Agreement and the performance by the parties of this Agreement. Each party, at its own expense shall negotiate and obtain any approval, 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 the State of California, excluding that body of law related to choice of laws, and of the United States of America. Any action or proceeding brought to enforce the terms of this Agreement or to adjudicate any dispute arising hereunder shall be brought in the Superior Court of the County of San Mateo, State of California or the United States District Court for the Northern District of California. 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 an 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 SCEA, the extend of which would be difficult to ascertain. Accordingly, in addition to any other remedies including without limitation equitable relief to which SCEA may be entitled, in the even of a breach by Publisher or any of its employees or permitted subcontractors or any such Sections of this Agreement, SCEA shall be entitled to the immediate issuance without bond of ex parte injunctive relief or, if a bond is required under applicable law, on the posting of a bond in an amount not to exceed $50,000, enjoining any breach or threatened breach or any or all of such provisions. IN addition, if Publisher fails to comply with any of its obligations as set forth herein, SCEA 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 an not in limitation of any injunctive relief or other remedies to which SCEA may be entitled under this Agreement or otherwise at law or in equity. In addition, Publisher shall indemnify SCEA for all losses, damages, liabilities, costs and expenses (including reasonable attorneys' fees and all reasonable related costs) which SCEA 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 portions 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, 6.2, 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 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 INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 26 future event or circumstance. 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, SCEA reserves the right to modify the SourceBook 2 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 thereof. 16.16 INTEGRATION. This Agreement together with the SourceBook 2, constitutes the entire agreement between SCEA and Publisher and supersedes all prior or contemporaneous agreements, proposals, understandings and communications between SCEA and Publisher, whether oral or written, with respect to the subject matter hereof including any PlayStation 2 Confidentiality and Nondisclosure Agreement and Materials Loan Agreement between SCEA 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. INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 27 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first written above. SONY COMPUTER ENTERTAINMENT INTERPLAY ENTERTAINMENT CORP. AMERICA INC. By: /s/ Phil Harrison By: /s/ Brian Fargo --------------------------- -------------------------- Print Name: Phil Harrison Print Name: Brian Fargo Title: Vice President Title: Chief Executive Officer Third Party Relations and Research and Development Date: May 15, 2000 Date: May 9, 2000 NOT VALID AGREEMENT UNTIL EXECUTED BY BOTH PARTIES INTERPLAY ENTERTAINMENT CORP.-IP PS2 LICENSED PUBLISHER AGREEMENT CONFIDENTIAL - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Page 28 EX-10 6 exhibit10-45.txt EXHIBIT 10.45 COMPUTER GAME LICENSE AGREEMENT This Computer Game License Agreement ("AGREEMENT") is made and entered into by and between TSR, Inc., a Wisconsin corporation having a principal place of business at 201 Sheridan Springs Road, Lake Geneva, WI 53147 ("TSR") and Interplay, a California corporation having a principle place of business at 17922 Fitch Avenue, Irvine, CA 92714 ("LICENSEE"). The following will set forth our mutual understanding and agreement with respect to the grant of rights by TSR to LICENSEE to develop, manufacture, distribute, promote, and sell products using the copyrights, trademarks, trade names and other intellectual property listed in Schedule A ("LICENSED PROPERTY"). 1. Grant of License. Subject to and in accordance with all of the terms and conditions of this AGREEMENT, TSR grants LICENSEE a license during the TERM to develop, manufacture, distribute, promote; and sell the products identified in Schedule B ("LICENSED PRODUCTS") using the LICENSED PROPERTY through wholesale and retail channels (but not, without TSR's prior written consent, by way of premiums Or giveaways or in connection with the sale or promotion of any other products) in the countries identified in Schedule C ("TERRITORY"). This license is non-exclusive except as may be designated in Schedules A, B, and C. Material, products, and countries may be added to or deleted from the LICENSED PROPERTY, LICENSED PRODUCTS, and TERRITORY, respectively, by mutual agreement of the parties in writing. TSR may delete material, products, and countries from the LICENSED PROPERTY, LICENSED PRODUCTS, and TERRITORY, respectively, at any time if required by court order or otherwise in all countries other than those in North America and Europe and in Japan and Australia. If any deletion occurs pursuant to the foregoing sentence, TSR and LICENSEE agree to negotiate in good faith a modification to the advance and royalty payments described herein. 2. Sublicensing. LICENSEE may enter into sublicenses provided that. Each sublicense: (1) includes provisions for the protection of TSR's copyrights, trademarks, and goodwill equivalent to the terms of Paragraphs 6-9, 17-18, 20-24, 26-27, and 34, of this AGREEMENT; (2) terminates immediately upon the expiration or earlier termination of this AGREEMENT; and (3) prohibits the sublicensee from itself sublicensinq any rights. LICENSEE will promptly provide TSR with one (1) fully-executed original of each sublicense entered into. Any LICENSED PRODUCTS produced or sold under a sublicense are subject to all terms - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. and conditions of this AGREEMENT and LICENSEE will take best efforts to ensure compliance therewith. 3. Best efforts. LICENSEE agrees to use its best efforts to actively, aggressively and effectively develop, manufacture, promote to the consumer and to the trade, distribute and sell the LICENSED PRODUCTS in the TERRITORY. LICENSEE will bear all costs in connection with those activities. 4. Prior activity. To the extent LICENSEE has engaged in any activity with respect to the LICENSED PROPERTY relating to the LICENSED PRODUCTS prior to the execution of this AGREEMENT, all such activity will be governed by the terms, and subject to the conditions of this AGREEMENT. 5. Development. LICENSEE has the sole responsibility and obligation for the cost of development, manufacturing, packaging, distribution, promotion and sale of the LICENSED PRODUCTS. "Cost of development" includes, without limitation, the cost of artwork, photography and related art services, from concept stage to final product, whether such materials and services are furnished directly by LICENSEE or by TSR at LICENSEE's expense. TSR may, at its option, loan materials to LICENSEE free of charge. LICENSEE will promptly return such loaned materials to TSR in their original condition when they are no longer needed by LICENSEE. 6. Approvals. (a) In order to assure that the quality of all LICENSED PRODUCTS, packaging, promotional material, or other use of the LICENSED PROPERTY is consonant with, and does not reflect adversely upon, the goodwill of the LICENSED PROPERTY and TSR. LICENSEE will consult with TSR during the development of each LICENSED PRODUCT and will obtain TSR's prior approval, such approval not to be unreasonably withheld, of each use of the LICENSED PROPERTY prior to release or distribution. LICENSEE will not change the text or contents of any approved use of the LICENSED PROPERTY without obtaining TSR's prior approval. TSR has sole right to grant or withhold its approval of any use of the LICENSED PROPERTY and may take into consideration such esthetics and other considerations as TSR deems appropriate. TSR and LICENSEE will adhere to the following approval procedures: (i) LICENSEE will provide a sample of the material, design and artwork for each LICENSED PRODUCT and its packaging - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. for TSR's approval and any other information requested by TSR concerning the LICENSED PRODUCT at the following four stages (as appropriate for each LICENSED PRODUCT) and will not proceed beyond each stage until it has received TSR's approval: * concept; * preliminary design; * final design; * pre-production sample; and * production sample. (ii) LICENSEE will provide samples of any advertisements, point-of-sale, or other promotional material for TSR's approval and will not publish distribute or otherwise use the material until it has received TSR's approval. (iii) All samples will be provided by LICENSEE without cost to TSR. LICENSEE will submit English translations of all samples containing text not in the English language. (iv) TSR will notify LICENSEE of its approval or disapproval of each sample in writing within ten (10) business days after TSR receives the sample and any requested additional information from LICENSEE, or such longer period of time as the parties may agree. If TSR does not approve or disapprove of a sample within eight (8) business days after TSR receives the sample, LICENSEE may request approval or disapproval by facsimile, and, if TSR does not thereafter approve or disapprove of the sample within two (2) business days, the sample will be deemed approved. If TSR disapproves of any sample, TSR will inform LICENSEE in writing of the reasons for its disapproval. (v) All samples and other communication relating to this approval procedure will be directed to the persons designated by each party in Schedule J (the "DESIGNATED PERSON" and "ALTERNATE PERSON"). The persons so designated may be changed by the respective party upon written notice to the other party. 7. Recall of Unapproved Material. If LICENSED PRODUCTS or other materials using the LICENSED PROPERTY are distributed to third - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. parties in violation of this AGREEMENT, LICENSEE will use its best efforts to promptly withdraw and withhold such LICENSED PRODUCTS or other materials from further distribution and to recover the LICENSED PRODUCTS or materials that have already been distributed. LICENSEE is not, however, obligated to retrieve any such LICENSED PRODUCTS or other material already in the possession of ultimate consumers. 8. Complaints. LICENSEE will diligently address all legitimate complaints brought to its attention regarding the LICENSED PRODUCTS. LICENSEE will advise of any category of recurring complaint and of any complaint which LICENSEE believe might result in legal or administrative action against LICENSEE or TSR. 9. Compliance with Laws. LICENSEE will comply with all sovereign, state and any other local laws, regulations and rules, including without limitation all trademark, patent and copyright laws of the United States and of any foreign country or countries in the TERRITORY applicable to the subject matter of this AGREEMENT other than the registration of intellectual property rights, and LICENSEE will bear all costs associated with its compliance with such laws, regulations, and rules. 10. Advance. Upon execution of this AGREEMENT and as otherwise provided in Schedule E, LICENSEE will pay TSR as advances against royalties the amounts set forth in Schedule E ("ADVANCES"). ADVANCES for each LICENSED PRODUCT are deductible against royalties for that LICENSED PRODUCT only and are non-refundable in all circumstances. The foregoing will not be interpreted as limiting any action for damages in the event TSR is in default of its representations or obligations hereunder. 11. Royalties. LICENSEE will pay TSR the ROYALTIES provided in Schedule H of LICENSEE's income from LICENSED PRODUCTS. [*] LICENSEE may establish a reserve for returns of not more than [*] of products sold which reserve will be liquidated each quarter and may deduct any credit for actual returns from the royalty payment for [*] in which the returns were accepted. "On-line Charges" means the amount received by LICENSEE for use of the on-line system in connection with the LICENSED PRODUCTS. "Sublicense Revenues" means all monies actually received by Interplay pursuant to a sublicense, including any advances received for sublicenses. 12. Payment of Royalties. Within [*] of the end of [*], LICENSEE will: (1) send to TSR by facsimile or first class or air mail a royalty statement in the form of Exhibit A showing the complete - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. computations made in calculating royalties for that [*]; and (2) wire transfer to an account designated by TSR or send by first class or air mail the royalty payment for [*]. If no sales of LICENSED PRODUCTS are made in [*], LICENSEE will inform TSR of such fact in writing within [*] of the end of [*]. All payments will be made in United States currency. Any payment not made when due will bear interest from its due date to the date of payment at [*], or at such lower rate of interest as may be required by law. Such interest is in addition to, and not in lieu of, any other remedy to which TSR is entitled. LICENSEE will give such further explanatory details of sales and the computation of royalties or other payments as TSR may reasonably request. 13. Tax Treatment. Whenever possible, LICENSEE will take the necessary steps to secure exemption from any obligation to withhold amounts for taxes payable by TSR to any governmental body in the TERRITORY, and TSR will cooperate with LICENSEE in such endeavor. If such endeavor is not successful, LICENSEE may deduct the amount paid by LICENSEE in taxes charged directly against TSR and in TSR's name PROVIDED that LICENSEE provides TSR with original documentation of such payment. All other taxes payable in the TERRITORY are LICENSEE's sole responsibility and will be paid entirely by LICENSEE. 14. Records. LICENSEE will maintain accurate and complete books and records relating to the manufacture, distribution, and sale of the LICENSED PRODUCTS during the TERM and for [*] thereafter. During this period, TSR's Certified Public Accountant ("CPA") may, during regular business hours and on [*] written notice to LICENSEE, examine and make extracts or copies of LICENSEE's books and records to determine the accuracy of the statements furnished to TSR. LICENSEE will cooperate and assist TSR's CPA in understanding LICENSEE's books and records. LICENSEE will promptly pay any deficiency plus interest as set forth in Paragraph 12. LICENSEE will pay the cost of the examination if the deficiency is [*] of the royalty payment or greater. 15. Minimum Guarantee. If the actual royalty earned and received by TSR during the ORIGINAL TERM, the 1ST OPTION TERM or the 2ND OPTION TERM is less than the sums provided therefore in Schedule F ("MINIMUM GUARANTEES"), LICENSEE will pay TSR the difference between the actual royalty earned and the MINIMUM GUARANTEE for that TERM within [*] of the end of the TERM. 16. Marketing Date. LICENSEE will release its first LICENSED PRODUCT by the date specified in Schedule a ("MARKETING DATE"). If LICENSEE does not comply with this provision TSR may terminate this - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. AGREEMENT and retain all payments made to TSR as of the date of termination, it being understood and agreed that such payments constitute liquidated damages and not a penalty. 17. Samples. Promptly upon the start-up of LICENSEE's initial production run, LICENSEEE will furnish to TSR without cost [*] samples of each LICENSED PRODUCT including any packaging, labels, hang-tags, catalogs, advertising, or other promotional material. Annually on the anniversary date of this AGREEMENT during the TERM, LICENSEE will furnish to TSR without cost [*] samples from recent production of each LICENSED PRODUCT including any packaging, labels, hang-tags, catalogs, advertising, or other promotional material. TSR may purchase from LICENSEE at LICENSEE's lowest selling price such royalty-free units of any LICENSED PRODUCT as TSR may request for sale in TSR's mail order catalog business or for other use. The amounts due to LICENSEE from TSR for such purchases may be deducted from any royalties owed to TSR by LICENSEE. 18. Ownership of Related Works. LICENSEE acknowledges and agrees that, except for development tools, all works developed by LICENSEE for use in connection with the LICENSED PRODUCTS, including without limitation video and computer game play elements, cluebooks, artwork, packaging, advertisements , text and translations ("RELATED. WORKS"), works of, and as associated by the public With the LICENSED PROPERTY. Game play elements means the audiovisual display of the computer and video games, including without limitation, game play, rules, symbols, designs, likenesses, sound- and visual representations. LICENSEE will have exclusive ownership of the copyright in all development tools and RELATED WORKS. LICENSEE agrees that, if it chooses to register its copyrights in any of the RELATED WORKS; it will register the RELATED WORKS as derivative works of the LICENSED PROPERTy. LICENSEE also agrees that it will not use the RELATED- WORKs either during or after the TERM of this AGREEMENT, Except under license or approval from TSR. 19. New Trademarks. LICENSEEE wi1l not use any new trademark (not originally owned by TSR or LICENSEE) in-connection with the LICENSED PRODUCTS without TSR's prior -written approval. Any such new trademark will become a part of the LICENSED PROPERTY and belong entirely to TSR, and LICENSEE's use of the trademark will inure to TSR's benefit. If a new trademark is used in the United States, Canada, United Kingdom, France, Germany, Japan, or Australia, TSR will register the mark in that country at TSR's expense. LICENSEE may request that TSR register a new trademark in any other country, in which event LICENSEE - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. and TSR will share equally the cost of registration. TSR will conduct and pay for the cost of any necessary trademark searches of new trademarks in the United States, Canada, United Kingdom, France, Germany, Japan, and Australia. LICENSEE will conduct and pay for the cost of any necessary trademark searches of new trademarks in any other country. Each party will promptly provide a copy of any trademark searches of new trademarks conducted by that party to the other. party. TSR will not use any new trademarks, either during or after the TERM of this AGREEMENT, except in connection with a license to, or approval by, LICENSEE. 20. Reservation of Rights. All rights not specifically granted herein are reserved to TSR, including without limitation the right to fully exploit in and out of the TERRITORY and during and after the TERM TSR's trademarks, trade names and copyrights. Nothing in this AGREEMENT will prevent TSR during the ORIGINAL TERM or OPTION TERM from preparing for, or holding discussions and arriving at agreements with any third parties regarding, the exploitation of TSR's rights in the LICENSED PROPERTY in connection with the LICENSED PRODUCTS so long as there are no commercial sales of a product in derogation of LICENSEE's exclusive license under this AGREEMENT during the TERM. 21. Trademark and Copyright Registration. LICENSEE will cooperate with TSR's prosecution or renewal of any U.S. or foreign trademark registration in connection with the LICENSED PROPERTY, including without limitation providing copies of invoices or receipts showing sales by LICENSEE of the LICENSED PRODUCTS and executing any appropriate documents. TSR will reimburse LICENSEE (or, upon request, pay in advance) for any reasonable out-of-pocket expenses over and above LICENSEE's normal operating costs, provided LICENSEE supplies receipts for all expenses twenty-five dollars ($25.00) or greater. 22. Trademark and Copyright Ownership. LICENSEE will cooperate with TSR in protecting- all rights in and to the LICENSED PROPERTY, including without limitation trademarks and copyrights. Each of the LICENSED PRODUCTS, and all packaging, labels, hang-tags, catalogs, advertising, or other promotional material relating thereto will bear the proper CREDIT specified in Schedule I, which may be amended by TSR in its reasonable discretion. LICENSEE may use its house mark or other pre-existing trademarks or trade names ("LICENSEE'S trademarks") in connection with the LICENSED PRODUCTS provided that LICENSEE's trademarks do not appear more conspicuously than TSR's trademarks. LICENSEE agrees to use the LICENSED PROPERTY only in the manner and form specified by TSR. LICENSEE does not - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. acquire hereby any property rights in or to the LICENSED PROPERTY. LICENSEE will not register for LICENSEE's benefit any LICENSED PROPERTY or any trademark or trade name that is confusingly similar to any LICENSED PROPERTY as prohibited by applicable law. LICENSEE agrees that it will not, during the TERM or thereafter, directly or indirectly, contest the validity of the LICENSED PROPERTY or this AGREEMENT. LICENSEE will, at TSR's request, execute any documents necessary to confirm TSR's ownership of the LICENSED PROPERTY in any country in the TERRITORY. TSR warrants, and LICENSEE acknowledges, TSR's ownership of or right to license the LICENSED PROPERTY and LICENSEE will not do or permit to be done any act that would impair the rights of TSR to the LICENSED PROPERTY. All use of the LICENSED PROPERTY inures to the benefit of TSR. 23. Trademark and copyright Protection. LICENSEE will promptly notify TSR of all infringements or violations of any of TSR's rights in the LICENSED PROPERTY and will cooperate with TSR in the prosecution of any legal action for infringement. If TSR prosecutes a legal action for infringement, TSR will bear all costs and will reimburse LICENSEE (or, upon request, pay in advance) for any reasonable out-of-pocket expenses over and above LICENSEE's normal operating costs incurred by LICENSEE in cooperating with TSR, provided LICENSEE supplies receipts for all expenses twenty-five dollars ($25.00) or greater. TSR has sole right, power, and authority to pursue any infringement or violation that it deems necessary or appropriate, and TSR is under no obligation to handle the infringement or violation to the satisfaction of LICENSEE. In the event that TSR advises LICENSEE that TSR will not participate in such legal action and that there is no objection to LICENSEE prosecuting such action, then LICENSEE shall be free to prosecute such action upon receiving express written permission and any directions from TSR's authorized legal counsel, pay all costs and expenses and receive all recoveries and awards; provided, however that TSR will always be free to subsequently join in any pending action and recoveries and awards will be divided between the parties according to their contribution to costs and expenses. 24. Promotional Activities with Third Parties. LICeNSEE will not engage in any promotional activity for the LICENSED PRODuCTs involving any third-Party or third-party products without obtaining TSR's prior written consent, which consent will not be unreasonably withheld. 25. Term. The license granted herein will be effective and - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. expire as of the dates specified in Schedule D, unless renewed or sooner terminated in accordance with the provisions of this AGREEMENT. Upon the expiration or termination of the TERM for any reason and any applicable sell-off period, all royalties accrued to TSR will become immediately due and payable. Furthermore, all rights licensed to LICENSEE will immediately revert to TSR and LICENSEE will immediately cease all use or exploitation of the LICENSED PROPERTY (except LICENSEE's sell-off rights, if any), including without limitation the manufacture, distribution, sale or promotion of the LICENSED PRODUCTS. LICENSEE acknowledges and agrees that if LICENSEE continues to use or exploit the LICENSED PROPERTY, TSR will be immediately and irreparable harmed and that TSR will be entitled to injunctive relief to stop such use or exploitation. 26. Bankruptcy. In the event that: (1) LICENSEE files a petition in bankruptcy; (2) LICENSEE is adjudicated bankrupt; (3) a petition in bankruptcy is filed against LICENSEE; (4) LICENSEE becomes insolvent or makes an assignment for the benefit of creditors; (5) LICENSEE discontinues its business relating to the LICENSED PRODUCTS; or (6) a receiver is appointed for LICENSEE or LICENSEE's business, TSR may, upon written notice to LICENSEE, terminate this AGREEMENT. In this event, neither LICENSEE nor LICENSEE's receivers, representatives, trustees, agents, administrators, successors or assigns have any right to sell any LICENSED PRODUCTS or otherwise exploit the LICENSED PROPERTY. 27. Breach. Except as may be otherwise provided in this AGREEMENT, if LICENSEE breaches any material obligations of this AGREEMENT, TSR may, in addition to exercising any of TSR's other rights, terminate the AGREEMENT upon thirty (30) days written notice to LICENSEE. Such termination will become effective immediately at the end of such thirty (30) day period unless LICENSEE completely remedies the breach within that period. Notwithstanding the foregoing, if LICENSEE breaches the approval provisions (Paragraph 6) or payment of royalties provisions (Paragraph 12) of this AGREEMENT [*] during any [*] regardless of whether the breaches have been cured or waived, TSR may give LICENSEE written warning and, if LICENSEE breaches such provisions again during the [*], TSR may terminate this AGREEMENT immediately by written notice to LICENSEE. 28. Survival. The expiration or termination of this AGREEMENT will only bring to an end the license granted to LICENSEE herein. All other provisions of this AGREEMENT will remain in effect, including without limitation all monetary obligations of LICENSEE. - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. The expiration or termination of this AGREEMENT will not constitute a waiver by either party of any right of action for breach of this AGREEMENT and any such right of action will survive expiration or termination of this AGREEMENT. 29. Expiration and Sell-Off. Upon the expiration but not the termination of the AGREEMENT, and provided that LICENSEE has fully performed and continues to fully perform all of LICENSEE's obligations hereunder, LICENSEE may, upon written notice thirty (30) days prior to expiration have the non-exclusive right to sell- (but not to manufacture) any finished units -of LICENSED PRODUCTS then in LICENSEE's possession for a period of six (6) months after expiration. 30. Riqht to Purchase Inventory. Upon expiration or termination of the AGREEMENT (including the sell-off period if applicable) TSR may purchase all or any part of: (l) LICENSEE's then existing LICENSED PRODUCTS at the lower of LICENSEE's actual manufacturing cost or sell-off price for each LICENSED PRODUCT; and (2) LICENSEE's promotional materials for the LICENSED PRODUCTS at the LICENSEE's actual cost for such materials. If TSR does not elect to purchase all of LICENSEE's inventory, promotional materials or production materials, TSR may: (1) designate a charity to receive all or part of the items; or (2) direct LICENSEE to immediately destroy the remaining items and furnish TSR with a certificate of destruction certified by an officer of LICENSEE's company. 31. Remaindering. LICENSEE will not remainder any LICENSED PRODUCT (i.e., sell at a price below LICENSEE's manufacturing cost therefor) less than twelve (12) months after the product's launch without TSR's prior express written approval in each instance. Before remaindering any products, LICENSEE will first offer TSR the right to buy all or any part of such LICENSED PRODUCTS at the lowest price and upon the terms LICENSEE has offered to remainder the products to third parties. 32. confidentiality. The parties each agree that during the TERM of this AGREEMENT, they may receive information regarding the other party's affairs which the disclosing party considers to be confidential. Each party receiving such confidential information agrees not to disclose it to any third party except to its own employees and agents and only as necessary to perform its obligations or exercise its rights under this AGREEMENT. This Paragraph is not applicable to any information which: (i) the receiving party is authorized in writing by the disclosing party to disclose; (ii) is - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. generally known in the trade or becomes part of the public domain in the trade through no fault of the receiving party; (iii) is disclosed by the disclosing party to others without restrictions on subsequent disclosure; (iv) is provided to the receiving party by a third-party not under any confidentiality obligation with regard thereto; or (v) is required by law to be disclosed. 33. Licensor's warranty. TSR warrants that it owns all rights in the LICENSED PROPERTY and has the right to license the LICENSED PROPERTY. TSR will indemnify and hold harmless LICENSEE and LICENSEE's officers, directors, agents and employees against any claims or causes of action alleging that the LICENSED PROPERTY infringes the rights of any third party. LICENSEE will give prompt notice to TSR in writing of any such claim or cause of action. TSR may, at its option, conduct the defense of any such cause of action and LICENSEE will cooperate fully with TSR in such defense 34. Licensee's Warranty. LICENSEE warrants and represents that LICENSEE has the right and the authority to enter into this AGREEMENT. Licensee also warrants and represents that the Licensed Products are in all respects safe and non-injurious and that assuming that TSR owns all rights in the Licensed PROPERTY, they do not violate the rights of any third-party. LICENSEE agrees to hold harmless and indemnify TSR against any and all claims of liability in connection with the LICENSED PRODUCTS other than allegations that the LICENSED PROPERTY infringes the rights of a third party), including without limitation alleged trademark, copyright or patent infringement or defect in any LICENSED PRODUCT. 35. Liability Insurance. LICENSEE will obtain and maintain, at its own expense, during the TERM (including any sell-off period if applicable) and for [*] thereafter Comprehensive General Liability Insurance coverage (including Product Liability/Completed Operations and Blanket Contractual Liability) written by an insurance company acceptable to TSR in an amount not less than [*] per occurrence Personal Injury and Property Damage combined single limit (the "Insurance Policy"). The Insurance Policy will name TSR and its officers, directors, agents, and employees as additional insured parties and will require the insurer to undertake their defense in any covered claim. The Insurance Policy will require the insurer to give TSR at least thirty (30) days prior written notice of any modification, cancellation, or lapse of the policy. Within thirty (30) days after execution of this AGREEMENT or ten (10) business days prior to the distribution of any LICENSED PRODUCTS, whichever is - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. earlier, LICENSEE will provide TSR with a fully paid Certificate of Insurance (or such other evidence of coverage as is acceptable to TSR) which shows that the Insurance Policy meets each of the above requirements. If LICENSEE fails to furnish such proof of insurance or if the insurance is modified, cancelled or allowed to lapse, TSR may, in addition to any other available remedies including termination of this AGREEMENT, obtain insurance coverage and bill LICENSEE for the premium cost. LICENSEE will pay such premium cost to TSR within ten (10) business days after receiving TSR's bill. 36. Force Majeure. Any delay in or failure of the performance of either party is excused only if and to the extent it is caused by occurrences beyond the party's control, including without limitation, acts of God, fire or flood, governmental regulations, policies or actions, or any labor, material transportation or utility shortage or curtailment. If any of these should occur, the party whose performance will be effected will immediately notify the other party in writing, explain how the party's performance may be affected, and give its best estimate of the how long it will be affected. The affected party will endeavor with due diligence to mitigate the effects on its performance. 37. Notices, Royalty statements and Payments. All notices will be in writing and will be hand delivered, mailed first class or airmail, or transmitted by wire to the appropriate party at the address set forth in Schedule J directed to the attention of the DESIGNATED PERSON. Notices will be effective: (1) if hand delivered, upon delivery; (2) if mailed first class or airmail, five (5) business days after deposit; and (3) if transmitted by wire, upon transmittal. All payments to TSR will be made payable to "TSR, Inc." mailed first class or airmail with the royalty statement to TSR to the PAYMENT PERSON and address set forth in Schedule K. 38. Binding Effect. This AGREEMENT will be binding upon and inure to the benefit of TSR's successors and assigns. This AGREEMENT will be binding upon and inure to the benefit of LICENSEE'S successors, but not LICENSEE's assigns except to an entity succeeding to all or substantially all of LICENSEE's business. This AGREEMENT is not assignable or delegable or sub-licensable by LICENSEE without TSR's prior written consent and any attempt to do so is null and void and of no force or effect. 39. Relationship of Parties. This AGREEMENT does not constitute a partnership, joint venture or any other agency - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. relationship or employment relationship between the parties. 40. Entire Understanding. This AGREEMENT sets forth the entire agreement and understanding between the parties relating the subject matter hereof and supersedes all prior agreements and understandings, written or oral, relating to the subject matter hereof. This AGREEMENT cannot be modified, amended, changed or extended orally. No waiver by any party of any term of this AGREEMENT, whether by conduct or otherwise, will be deemed a continuing waiver of the same or any other term of this AGREEMENT. 41. Authorizations. All officers and individuals executing this AGREEMENT and other documents on behalf of each party certify and warrant that they have the capacity to do so. 42. Headings. The headings of this AGREEMENT are inserted only for convenience and will not be construed as a part of this AGREEMENT. When appropriate in this AGREEMENT, references to the singular will be read to include the plural and vice versa, and pronouns will be read to include the corresponding masculine, feminine, or neuter forms. 43. Governing Law. This AGREEMENT will be construed and governed by the laws of the State of Wisconsin applicable to agreements made and to be performed entirely in Wisconsin, U.S.A. without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Wisconsin or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Wisconsin. Any provision of this AGREEMENT which is invalid, illegal or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without in any manner affecting the remaining provisions hereof in any jurisdiction or rendering that or any other provision of this AGREEMENT invalid, illegal, or unenforceable in any other jurisdiction. 44. Legal Action. The parties submit exclusively to the personal jurisdiction of the federal district court for the Eastern District of Wisconsin, U.S.A. and the state court of Walworth County, Wisconsin, U.S.A. and agree that such courts are a convenient forum for resolution of all disputes regarding this AGREEMENT. The parties agree to accept service of process during and after the TERM by mail (for LICENSOR, attention Chris Kilpatrick) or any other method - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. provided by Wisconsin law. Each party agrees that if so served it will not object to the manner of service or the personal jurisdiction of the court regarding any dispute relating to the AGREEMENT that is within the court's subject matter jurisdiction. In the event that legal action is instituted between the parties hereto in connection with this AGREEMENT, each party will be entitled to recover from the losing party interest on any monetary award and its costs and expenses of litigation, including without limitation court costs and reasonable attorneys' fees, as to that part of the legal action for which it prevails. Interest on any money judgement will accrue from the date the damages were sustained and will be at the interest rate provided in Paragraph 12 of this AGREEMENT unless a different rate of interest is required by law. The parties indicate their understanding and agreement with all of the foregoing by signing and dating this document in the space provided below. ACCEPTED AND AGREED: TSR: LICENSEE: TSR, Interplay Productions, Inc. By: /Willard Martens/ By: /Brian Fargo/ Name: Willard Martens Name: Brian Fargo Title: Chief Operating Officer Title: President Date: 8/8/94 Date: 8/1/94 - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. DATED: TSR, INC. COMPUTER GAME LICENSE AGREEMENT SCHEDULES ANNEXED TO THE FOLLOWING AGREEMENT These Schedules are incorporated into and made a part of the Computer Game License Agreement of the same date between TSR, Inc. and the Licensee identified below: LICENSEE: Interplay Productions, Inc. 17922 Fitch Avenue Irvine, CA 92714 SCHEDULE A: LICENSED PROPERTY: An exclusive license to use the "PLANESCAPE" and "FORGOTTEN REALMS" trademarks and all copyrighted materials, including but not limited to, characters, locations and monsters, that are unique to TSR's "PLANESCAPE" and "FORGOTTEN REALMS" fantasy worlds. A non-exclusive license to use, solely in connection with LICENSED PRODUCTS bearing the "PLANESCAPE" or "FORGOTTEN REALMS" trademarks, the trademarks and copyrighted materials associated with, but not unique to, the "PLANESCAPE" and "FORGOTTEN REALMS" fantasy worlds, including without limitation, the "ADVANCED DUNGEONS & DRAGONS," "AD&D," TSR," and "TSR Logo" trademarks. SCHEDULE B: LICENSED PRODUCTS: Computer and video fantasy role-playing games for all personal computer and video game platforms known or unknown, including without limitation, coin operated, cable, on-line, satellite and other electronic transmission systems. Cluebooks and "900" telephone numbers containing hints, clues, diagrams, maps or other material to assist players for said computer and video games. - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. This license is exclusive only as to computer and video games bearing the "PLANESCAPE" or "FORGOTTEN REALMS" trademarks, and cluebooks and "900" telephone numbers for said computer and video games. Nothing in this AGREEMENT will prevent TSR from fully exploiting in any other manner its rights in the LICENSED PROPERTY. SCHEDULE C: TERRITORY: Worldwide SCHEDULE D: TERM: Commencing upon the date of the last party to sign the AGREEMENT; expiring four (4) years and: six (6) months from the date of commencement. (The period from commencement to such expiration is called the "ORIGINAL TERM"). LICENSEE, at its option, and provided that LICENSEE is in compliance, and continues to comply, with the AGREEMENT, may extend the term for two (2) additional two (2) year periods (the "lST OPTION TERM" and "2ND OPTION TERM," respectively) upon written notice and payment of required advance to TSR at least one (1) year prior to the expiration of the: (1) ORIGINAL TERM to accept the 1ST OPTION TERM; and (2) the 1ST OPTION TERM to accept the 2ND OPTION TERM. SCHEDULE E: ADVANCES: [*] due upon execution. For each game title initially released for play on on-line, cable, satellite, or other electronic transmission systems ("Electronic Product"), [*] upon such initial release and [*] upon any subsequent release of said game title other than as an Electronic For each game title initially released other than as an Electronic Product, [*] upon such initial release. - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. If LICENSEE has not paid TSR at least [*] in additional advances (over and above the advance due upon execution) [*] after the date of commencement, the difference between the amount of additional advances paid by LICENSEE and [*]. [*] due upon notification by LICENSEE that it will exercise the 1ST OPTION TERM. [*] due upon notification by LICENSEE that it will exercise the 2ND OPTION TERM. [*] per cluebook title due upon initial shipment of that title. SCHEDULE F: MINIMUM GUARANTEE: [*] for the ORIGINAL TERM. [*] for the 1ST OPTION TERM. [*] for the 2ND OPTION TERM. SCHEDULE G: MARKETING DATE: [*] after commencement of the AGREEMENT. SCHEDULE H: ROYALTIES: Product Type Royalty Personal computer and [*] coin operated On-line, cable, satellite or other electronid transmission system [*] Home video game cartridges [*] - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Cluebooks [*] Currently unknown platforms not belonging in any of the above categories Negotiated in good faith Sublicensing Royalty On-line games [*] Products other than on-line games developed by LICENSEE [*] Products other than on-line games developed by SUBLICENSEE (where LICENSEE does not take a substantial role in the development of a product) [*] SCHEDULE I: CREDIT: Trademark and copyright notice: [list all trademarks used] are trademarks of TSR, Inc. Used by Interplay Productions, Inc. under license from TSR, Inc. SCHEDULE J: NOTICES AND APPROVAL: TSR: LICENSEE: TSR, Inc. Interplay Productions, Inc. P.O. Box 756 17922 Fitch Avenue 201 Sheridan Springs Road Irvine, CA 92714 Lake Geneva, WI 53147 DESIGNATED PERSON: Marlene Vail DESIGNATED PERSON: Chuck Camps ALTERNATE PERSON: Debra Poutsch ALTERNATE PERSON: Phil Adam SCHEDULE K: PAYMENTS: - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. TSR, Inc. P.O. Box 756 201 Sheridan Springs Road Lake Geneva, WI 53147 PAYMENT PERSON: Marlene D. Vail - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. EX-10 7 exhibit10-47.txt EXHIBIT 10.47 SECOND AMENDMENT TO LICENSE AGREEMENT BETWEEN TSR, INC AND INTERPLAY PRODUCTIONS This Second Amendment To License Agreement is made effective this 8th day of March, 1998, by and between Interplay Entertainment Corp., as successor in interest to and doing business as, Interplay Productions, 16815 Von Karman Avenue, Irvine, California, a Delaware corporation ("Licensee") and TSR, Inc., 1801 Lind Avenue SW, Renton, Washington, a Wisconsin corporation ("Licensor"). WHEREAS, Licensor and Licensee entered into a certain License Agreement date as August 8, 1994 as amended (the "License Agreement"); and WHEREAS, Licensor and Licensee mutually wish to further amend the License Agreement as provided below; NOW THEREFORE, in exchange for mutual covenants set forth herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. The License Agreement is hereby amended by inserting a new Schedule E: SCHEDULE E: ADVANCES: [*] due upon execution, which has been paid. For each game title initially released for play on on-line, cable, satellite, or other electronic transmission systems ("Electronic Product"), [*] upon such initial release and [*] upon any subsequent release of said game title other than as an Electronic Product. For each game title initially released other than as an Electronic Product, [*] upon such initial release. If LICENSEE has not paid TSR at least [*] in additional advances (over and above the advance due upon execution) [*] after the date of commencement, the difference between the amount of additional advances paid by LICENSEE and [*]. [*] due as follows upon notification LICENSEE that it will exercise the 1st OPTION TERM: [*]; [*]; [*]. [*] due upon notification by LICENSEE that it will exercise the 2nd OPTION TERM. [*] due upon notification by LICENSEE that it will exercise the 3RD OPTION TERM. - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. [*] per clue book title due upon initial shipment of that title. 2. The License Agreement is hereby amended by inserting a new Schedule F: SCHEDULE F: MINIMUM GUARANTEE: [*] for the ORIGINAL TERM. The actual royalty earned and received by TSR during the entire first calendar quarter of 1999 shall be applied toward the MINIMUM GUARANTEE for the ORIGINAL TERM. [*] for the 1ST OPTION TERM. Only the actual royalty earned and received by TSR during the 1ST OPTION TERM minus the royalty amount from the commencement of the 1ST OPTION TERM to the end of first calendar quarter of 1999 shall be applied toward the MINIMUM GUARANTEE for the 1ST OPTION TERM. For the 2ND OPTION TERM, the MINIMUM GUARANTEE shall be based upon LICENSEE's election of the LICENSED PROPERTY and shall be as follows: [*] for the BALDUR' S GATE game(s); [*] for the NEVERWINTER NIGHTS game(s); and [*] for the TORMENT game(s). For the 3RD OPTION TERM, the MINIMUM GUARANTEE shall be based upon LICENSEE's election of the LICENSED PROPERTY and shall be as follows: [*] for the BALDUR'S GATE game(s); [*] for the NEVERWINTER NIGHTS game(s); and [*] for the TORMENT game(s). 3. The License Agreement is hereby amended by inserting a new Schedule A: SCHEDULE A: LICENSED PROPERTY: For the ORIGINAL TERM, LICENSED PROPERTY shall mean the following: An exclusive license to use the PLANESCAPE and FORGOTTEN REALMS trademarks and all copyrighted materials, including but not limited to, characters, locations and monsters, that are unique to TSR's PLANESCAPE and FORGOTTEN REALMS fantasy worlds. A non-exclusive license to use, solely in connection with LICENSED PRODUCTS bearing the PLANESCAPE or FORGOTTEN REALMS trademarks, the trademarks and copyrighted materials associated with, but not unique to, the PLANESCAPE and - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. FORGOTTEN REALMS fantasy worlds, including without limitation, the ADVANCED DUNGEONS & DRAGONS, AD&D, TSR, and TSR Logo trademark. An exclusive sublicense to use any computer code for the presently existing NEVERWINTER NIGHTS game the copyright for which is owned by Strategic Simulations, Inc. only for so long as the existing NEVERWINTER NIGHTS game continues to be made available on the America Online network and only for the purpose of continuing the existing NEVERWINTER NIGHTS game. This license specifically excludes any other use of said computer code and in particular any use of the computer code in any modifications of or sequels to the existing NEVERWINTER NIGHTS game. This license also specifically excludes any computer code owned by any other party, including without limitation America Online, Inc. For 1ST OPTION TERM, the term LICENSED PROPERTY shall mean the following: An exclusive license to use BALDUR'S GATE as the title of a retail PC and/or home video game product and sequels; TORMENT as the title of a retail PC and/or home video game product and sequels; and NEVERWINTER NIGHTS as the title of a retail PC and/or home video game product, with subtitle to be mutually agreed upon. A non-exclusive license to use, solely in connection with LICENSED PRODUCTS bearing the BALDUR'S GATE, TORMENT, or NEVERWINTER NIGHTS trademarks, the trademarks and copyrighted materials associated with, but not unique to, the PLANESCAPE and FORGOTTEN REALMS fantasy worlds, including without limitation, the ADVANCED DUNGEONS & DRAGONS, AD&D, TSR, and TSR Logo trademark; provided, however, that Licensee's rights shall be exclusive with respect to computer software games primarily located in the Baldur's Gate and Neverwinter areas of the Forgotten Realms world. For purposes of clarification, Licensor may develop, manufacture, distribute, promote, license, and sell (and authorize any third party to do so) computer software games based in the Forgotten Realms world allowing players to venture into the Baldur's Gate or Neverw inter areas. Licensor shall not develop, manufacture, distribute, promote, license, or sell (nor authorize any third party to do so) any computer software game primarily located, based or focused in the Baldur's Gate or Neverwinter areas. For 2ND OPTION TERM and 3RD OPTION TERM, the term LICENSED PROPERTY shall mean the following: Upon written notification to TSR as set forth in Advances and Terms, the choice of an exclusive license to use BALDUR'S GATE as the title of a retail PC and/or home video game product and sequels; TORMENT as the title of a retail PC and/or home video game product and sequels; or NEVERWINTER NIGHTS as the title of a retail PC and/or home video game product with subtitle to be mutually agreed upon. All rights to the titles not selected by LICENSEE shall expire at the end of the applicable Term and revert to TSR. - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. Consistent with the titles selected, a non-exclusive license to use, solely in connection with LICENSED PRODUCTS bearing the HALDUR'S GATE, TORMENT, or NEVERWINTER NIGHTS trademarks, the trademarks and copyrighted materials associated with, but not unique to, the PLANESCAPE and FORGOTTEN REALMS fantasy worlds, including without limitation, the ADVANCED DUNGEONS & DRAGONS, AD&D, TSR, and TSR Logo trademark; provided, however, that Licensee's rights shall be exclusive with respect to computer software games primarily located in the Baldur's Gate and Neverwinter areas of the Forgotten Realms world. For purposes of clarification, Licensor may develop, manufacture, distribute, promote, license, and sell (and authorize any third party to do so) computer software games based in the Forgotten Realms world allowing players to venture into the Baldur's Gate or Neverwinter areas. Licensor shall not develop, manufacture, distribute, promote, license, or sell (nor authorize any third party to do so) any computer software game primarily located, based or focused in the Baldur's Gate or Neverwinter areas. 4. The License Agreement is hereby amended by inserting a new Schedule B: SCHEDULE B: LICENSED PRODUCTS: Computer and video fantasy role-playing games for all personal computer and video game platforms known or unknown, including without limitation, coin-operated, cable, on-line, satellite and other electronic transmission Systems. For 1ST OPTION TERM, 2ND OPTION TERM, and 3RD OPTION TERM, the term LICENSED PRODUCTS shall be mean the following: Retail PC and/or home video game products which may include the ability for the consumer to utilize the retail game product to play the game via modem and over a local area network and shall include the right of Licensee to use, execute, transmit, perform and display the Licensed Product via an online network to enable users to play the Licensed Product free of charge (e.g. a "Battle.net" type network). Clue book and "900" telephone numbers containing hints, clues, diagrams, maps or other material to assist players for said computer and video games. Nothing in this Agreement will prevent TSR from flilly exploiting in any other manner its rights in the LICENSED PROPERTY. - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. 5. The License Agreement is hereby amended by inserting a new Schedule D: SCHEDULE D: TERMS: Commencing upon the date of the last party to sign the AGREEMENT; expiring four (4) years and six (6) months from the date of commencement. (The file period from commencement to such expiration is called the "ORIGINAL TERM"). LICENSEE, at its option, and provided that LICENSEE is in compliance, and continues to comply with the AGREEMENT, may extend the term for three (3) additional two (2) year periods (the "1 ST OPTION TERM", "2ND OPTION TERM," and "3RD OPTION TERM," respectively) upon written notice and payment of required Advance to TSR at least one (1) year prior to the expiration of: (1) the ORIGINAL TERM to accept the 1ST OPTION TERM; (2) the 1ST OPTION TERM to accept the 2ND OPTION TERM; and (3) the 2ND OPTION TERM to accept the 3RD OPTION TERM. Notwithstanding the foregoing, LICENSOR acknowledges that LICENSEE has provided timely notice to accept the 1ST OPTION TERM and shall make payment as set forth in Section 1 herein. Notwithstanding anything contained herein to the contrary, LICENSEE's rights to manufacture, distribute, promote, and sell each LICENSED PRODUCT released during the ORIGINAL TERM or any OEON TERM (if applicable) shall extend beyond the ORIGINAL TERM or any OPTION TERM (if applicable) for the Active Life of the LICENSED PRODUCT. "Active Life" shall mean the longer of: (i) two (2) years from the first commercial release of the LICENSED PRODUCT, or (ii) until such time as LICENSEE has failed to pay at least [*] in Royalties of the LICENSED PRODUCT in the previous calendar year but in no event shall the Active Life extend any right to manufacture, distribute, promote, or sell any new version or improvement to any LICENSED PRODUCT nor shall the Active Life extend the time to manufacture, distribute, promote, or sell any LICENSED PRODUCT beyond February 8, 2007. For purposes of the definition of the term Active Life, Royalties of the LICENSED PRODUCT shall only be considered paid if LICENSEE receives and reports as part of Net Sales an amount not less than [*] per stand alone unit; provided, however, LICENSED PRODUCT Royalties may be derived from other unit sales of LICENSED PRODUCT only if LICENSEE provides LICENSOR with a written request and details of such a sales program (e.g. OEM or compilations) and receives written approval from LICENSOR for the sales program. 6. The License Agreement is hereby amended by adding to EXHIBIT H (ROYALTIES): Advertising derived from on-line play of LICENSED PRODUCT[*] - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. IN WITNESS WHEREOF, the parties have executed this Second Amendment To License Agreement by their duly authorized officers as of the date first set forth above. Upon expiration of the Agreement, the parties will negotiate additional renewal terms in good faith. LICENSOR: LICENSEE: TSR, INC. INTERPLAY ENTERTAINMENT CORP. By: /Emily Arons/ By: /Christopher Kilpatrick/ Emily Arons Name: Christopher Kilpatrick V.P. Consumer Products Title: President - --------------------- * Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission ("SEC") pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and have been filed separately with the SEC. -----END PRIVACY-ENHANCED MESSAGE-----