Sony PlayStation(TM) License Agreement - Sony Computer Entertainment of America and Acclaim Entertainment Inc.
SONY PLAYSTATION(TM) LICENSE AGREEMENT
THIS LICENSE AGREEMENT is entered into as of the 14th day of December, 1994,
by and between SONY COMPUTER ENTERTAINMENT OF AMERICA, a division of Sony
Electronic Publishing Company, with offices at 711 Fifth Avenue, New York,
New York 10022 (hereinafter "Sony"), and Acclaim Entertainment, Inc., with
offices at 71 Audrey Avenue, Oyster Bay, New York 11771 (hereinafter
"Licensee").
WHEREAS, Sony and/or its affiliates have developed a CD-based interactive
console for playing video games and for other entertainment purposes known
as PlayStation(TM) (formerly known under the development code name "PS-X")
(hereinafter referred to as the "Player") and also own or have the right to
grant licenses to certain intellectual property rights used in connection
with the Player.
WHEREAS, Licensee desires to be granted a non-exclusive license to develop
and distribute Licensed Products (as defined below) pursuant to the terms
and conditions set forth in this Agreement.
WHEREAS, Sony is willing, on the terms and subject to the conditions of this
Agreement, to grant Licensee the desired non-exclusive license to develop
and distribute Licensed Products, and desires to manufacture such Licensed
Products for Licensee.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Licensee and Sony
hereby agree as follows:
1. Definition of Terms.
1.1 "Executable Software" means Licensee's object code software which
includes the Licensee Software and any software (whether in object code or
source code form) provided by Sony which is intended to be combined with
Licensee Software for execution on a Player and has the ability to
communicate with the software resident in the Player.
1.2 "Intellectual Property Rights" means, by way of example but not by
way of limitation, all current and future worldwide patents and other patent
rights, copyrights, trademarks, service marks, trade names, mask work
rights, trade secret rights, technical information, know-how, and the
equivalents of the foregoing under the laws of any jurisdiction, and all
other proprietary or intellectual property rights throughout the universe,
including without limitation all applications and registrations with respect
thereto, and all renewals and extensions thereof.
1.3 "Licensed Territory" means the countries listed in Exhibit A, as
may be in effect from time to time.
1.4 "Licensed Products" shall mean the Executable Software embodied on
CD-ROM media.
1.5 "Licensed Trademarks" means the trademarks, service marks and
logos designated by Sony. Nothing contained in this Agreement shall in any
way grant Licensee the right to use the trademark "Sony" in any manner as a
trademark, trade name, service mark or logo other than as expressly
permitted by Sony. Sony may amend such Licensed Trademarks upon reasonable
written notice to Licensee.
1.6 "Licensee Software" means Licensee's application object code and
data (including audio and video material) developed by Licensee in
accordance with this Agreement, which, when linked to any software provided
by Sony, create Executable Software.
1.7 "Packaging" means, with respect to each Licensed Product, the
carton, containers, packaging and wrapping materials (but excluding
instructional manuals, liners or other user information for such Licensed
Product to be inserted in the jewel case).
1.8 "Sony Materials" means any data, object code, source code,
documentation, and hardware provided or supplied to Licensee by Sony,
including, without limitation, any portion or portions of the development
tools.
2. License Grant.
Sony hereby grants to Licensee, and Licensee hereby accepts, for the
term of this Agreement, within the Licensed Territory, under Sony's
Intellectual Property Rights, including without limitation any relevant
patents Sony owns or has acquired by license, a non-exclusive, nontrans-
ferable license, without the right to sublicense (except as specifically
provided herein): (i) to use the object code version of any software
supplied by Sony that is intended to be combined with Licensee Software and
executed on a Player internally as may reasonably be necessary to develop
Licensed Products; (ii) to reproduce and distribute executable files for
execution on a Player incorporating such software in accordance with the
provisions of this License Agreement, including without limitation, Section
7; (iii) to market, distribute and sell such Licensed Products; (iv) to use
the Licensed Trademarks in connection with the packaging, advertising and
promotion of the Licensed Products; and (v) to sublicense to end users the
right to use the Licensed Products for non-commercial purposes only and not
for public performance.
3. Development Tools.
After execution of this Agreement, Sony will provide to Licensee the
hardware and software development tools which Sony deems to be necessary for
development of the Executable Software pursuant to an agreement to be
entered into separately between the parties hereto.
4. Limitations on Licenses; Reservation of Rights.
4.1 Reverse Engineering Prohibited. Licensee hereby agrees not to
disassemble, peel semiconductor components, decompile, or otherwise reverse
engineer or attempt to reverse engineer or derive source code from, all or
any portion of the Sony Materials (whether or not all or any portion of the
Sony Materials are integrated with the Licensee Software), or permit or
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encourage any third party to do so, or use or acquire any materials from any
third party who,
does so. Licensee 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 this License Agreement. Licensee shall be required in
all cases to pay royalties in accordance with Section 9 hereto to Sony on any
of Licensee's products utilizing Sony Materials or which are in any way
derived from the disassembly, decompilation, reverse engineering of, or use
of source code derived from, the Sony Materials.
4.2 Reservation of Sony's Rights. The licenses granted in this
License Agreement extend only to development of Licensed Products for use on
the Player, in such format as may be designated by Sony. Without limiting
the generality of the foregoing, Licensee shall not have the right to
distribute or transmit the Executable Software or the Licensed Products (to
the extent such Executable Software or the Licensed Products include Sony
Materials) via electronic means or any other means now known or hereafter
devised, including without limitation, via wireless, cable, fiber optic
means, telephone lines, microwave and/or radio waves, or over a network of
interconnected computers or other devices. This License Agreement does not
grant any right or license, under any Intellectual Property Rights of Sony
or otherwise, except as expressly provided herein, and no other right or
license is to be implied by or inferred from any provision of this License
Agreement or the conduct of the parties hereunder. Licensee shall not make
use of any of the Sony Materials and Player or any Intellectual Property
Rights related to the Sony Materials and Player (or any portion thereof)
except as authorized by and in compliance with the provisions of this
License Agreement or as may be otherwise expressly authorized in writing by
Sony. No right, license or privilege has been granted to Licensee hereunder
concerning the development of any collateral product or other use or purpose
of any kind whatsoever which displays or depicts any of the Licensed
Trademarks.
4.3 Reservation of Licensee's Rights. Licensee retains all rights,
title and interest in and to the Licensee Software, including without
limitation, Licensee's Intellectual Property Rights therein, and nothing in
this Agreement shall be construed to restrict the right of Licensee to
develop products incorporating the Licensee Software (separate and apart
from the Sony Materials) for any hardware platform or service other than the
Player.
5. Quality Standards for the Licensed Products.
5.1 Product Proposal. Licensee shall be required to submit product
proposals as follows: At least prior to any planned commercial release
of any Licensed Product, Licensee shall submit to Sony a product proposal
form (the "Product Proposal"). Licensee shall notify Sony promptly in writing
of any material proposed change in any portion of the Product Proposal and
shall, from time to time at the request of Sony for quality assurance
purposes, submit work-in-progress on the Licensed Product during the
development process, in a medium designated by Sony, for Sony's approval.
Licensee shall notify Sony promptly in writing in the event of any material
proposed change in any portion of the Product Proposal after such submission.
Sony shall have the right, from time to time with appropriate notice to
Licensee, to limit the number of proposed Licensed Products that Licensee may
submit to Sony for review and approval or disapproval, during any period
following the effective date of this Agreement.
5.2 Approval of Content and Executable Software. The Licensed Products,
including, without limitation, the content and title of each of the Licensed
Products, and/or Licensee's use of any of the Licensed Trademarks, shall be
subject to Sony's prior written approval, which shall be within Sony's sole
discretion as to acceptable standards relating to the . Furthermore,
such Licensed Products shall not in any event contain . Licensee
shall, on or before the estimated release date referred to in the Product
Proposal, deliver to Sony for its inspection and evaluation, a prototype of
the Executable Software for the proposed Licensed Product. Such prototype
shall be in the format prescribed by Sony. Sony will evaluate such prototype
Executable Software and notify Licensee in writing of its approval or
disapproval of such Executable Software. Such disapproval shall only be based
upon Licensee's failure to comply with , determined in the sole
discretion of Sony and communicated to Licensee at the time of such
notification, or the restrictions set forth in the first two sentences of
this section. If such Executable Software is disapproved, Sony shall specify
the reasons for such disapproval and state what corrections and/or
improvements are necessary. Any such changes to the Executable Software shall
be made by Licensee at Licensee's cost. Sony will also identify to Licensee
certain of its software testers which shall be designated, in whole or in
part, to work on the submitted Executable Software of Licensee. After making
the necessary corrections and/or improvements, Licensee may submit a new
prototype for approval or disapproval by Sony. No approval by Sony of any
element of the Executable Software shall be deemed an approval of any other
element of the Licensed Product, nor shall any such approval be deemed to
constitute a waiver of any of Sony's rights under this Agreement.
5.3 Approval of Packaging and Artwork. For each proposed Licensed
Product, Licensee shall be responsible, at Licensee's expense, for
developing all artwork and mechanicals ("Artwork") set forth on the
Packaging, and all instructional manuals, liners and other user materials
("Inserts") inserted into the jewel box (Artwork and Inserts herein
collectively referred to as "Printed Materials"). All Printed Materials
shall comply with the requirements of the Sony Guidelines (hereinafter
"Guidelines") to be provided to Licensee subsequent to the execution of this
License Agreement, and as may be amended from time to time upon written
notice by Sony. At the time prototype Executable Software for a proposed
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Licensed Product is submitted to Sony for inspection and evaluation,
Licensee shall also deliver to Sony, for review and evaluation, the proposed
final Printed Materials for such proposed Licensed Product, and a form of
limited warranty for the proposed Licensed Product. Licensee agrees that
the quality of such Printed Materials shall be of at least the same quality
as that associated with
. If any of the Printed Materials are
disapproved because they do not comply with the foregoing, Sony shall specify
the reasons for such disapproval and state what corrections are necessary,
provided that terms of disapproval shall be limited to the restrictions set
forth in and inclusion of appropriate ratings information as set
forth in Section 5.5 hereto.
After making the necessary corrections to the disapproved Printed Materials,
Licensee may submit new proposed Printed Materials for approval by Sony.
Sony shall not unreasonably withhold its approval of the proposed Printed
Materials submitted for review by Licensee in accordance with the terms of
this Section. No approval by Sony of any element of the Printed Materials
shall be deemed an approval of any other element of the Licensed Product,
nor shall any such approval be deemed to constitute a waiver of any of
Sony's rights under this Agreement.
5.4 Advertising Materials. Pre-production samples of the advertising,
merchandising, promotional, and display materials of or concerning the
Licensed Products (collectively referred to hereinafter as the "Advertising
Materials") shall be submitted by Licensee to Sony, free of cost, for Sony's
evaluation and approval as to style and usage of any of the Licensed
Trademarks, and appropriate reference of the notices, prior to any actual
production, use, or distribution of any such items by Licensee or in its
behalf. No such proposed Advertising Materials shall be produced, used, or
distributed directly or indirectly by Licensee without first obtaining the
written approval of Sony. Subject in each instance to the prior written
approval of Sony, Licensee may use such textual and/or pictorial advertising
matter (if any) as may be created by Sony or in its behalf pertaining to the
Sony Materials and/or to the Licensed Trademarks on such promotional and
advertising materials as may, in Licensee's judgment, promote the sale of
the Licensed Products within the Licensed Territory. Sony shall have the
right to use the Licensed Products in any advertising or promotion for
Player at Sony's expense, subject to Licensee's reasonable prior approval
with respect to use of Licensee's trademarks and copyrighted materials
contained in such advertisement or promotion. Sony shall confer with
Licensee regarding the text of any such advertisement. If required by Sony
and/or any governmental entity, Licensee shall include, at Licensee's cost
and expense, the required consumer advisory rating code(s) on any and all
marketing and advertising materials used in connection with the Licensed
Product, which shall be procured in accordance with the provisions of
Section 6 below.
5.5 Labeling Requirements. All Printed Materials for each unit of the
Licensed Products shall have conspicuously, legibly and irremovably affixed
thereto the notices specified in a template to be provided to Licensee
subsequent to the execution of this License Agreement, which template may be
amended from time to time by Sony during the term of this License Agreement.
Licensee agrees that, if required by Sony or any governmental entity, it
shall submit each Licensed Product to a consumer advisory ratings system
designated by Sony and/or such governmental entity for the purpose of
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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 Licensee. Any required consumer advisory rating code(s)
procured hereby shall be displayed on the Licensed Product and the
associated Printed Materials in accordance with the Guidelines, at
Licensee's cost and expense.
6.1 Obligation to Release Licensed Products. Licensee agrees to
commercially release a total of Licensed Products in each of the first
of the Term, including the title commercially released during
provided, that such obligation with respect to the will be waived if
the market share of the Player as measured by the Toy Retail Sales Tracking
Service (TRSTS) falls below for, beginning following
commercial release of the Player in the United States. Licensee agrees that
all such titles will be designed (if an original title for the Player) or
modified (if a pre-existing title) to substantially utilize the particular
capabilities of the Sony Materials and the Player.
6.3 Restriction on Publication. Licensee agrees that it shall not
publish products pursuant to this Agreement for play on the Player for any
third party either directly or indirectly through any partnership, joint
venture affiliated label program or other arrangement. Licensee may only
publish products for a third party if such third party has executed a
separate license agreement with Sony and, under any arrangement between
Licensee and third party, such third party's products are expressly made
subject to the terms of the third party's agreement with Sony. The foregoing
notwithstanding, nothing herein shall prevent Licensee from publishing
products for play on the Player pursuant to this Agreement pursuant to a
license of a property from a third party made in the normal course of
business and subsequently developed by Licensee or by one of its approved
subcontractors pursuant to Section 17.5. The parties agree that the express
intent of this Section 6.3 is to limit the grant by Sony of the licenses to
publish products for play on the Player under this Agreement to Licensee.
7. Manufacture of the Licensed Products.
7.1 Manufacture by Sony.
7.1 Appointment of Sony as Manufacturer. Licensee
hereby appoints Sony, and Sony hereby accepts such appointment, as the
manufacturer of units of the Licensed Products. Licensee
acknowledges and agrees that it shall purchase from Sony of its
requirements for finished units of the Licensed Products and inserts for
such Licensed Products, subject to Section 7.1.3 below, during the term of
the Agreement. Sony shall provide to Licensee written specifications setting
forth terms relating to the manufacturing of Licensed Products and their
component parts ("Specifications") subsequent to execution of this
Agreement, which may be amended from time to time upon reasonable written
notice to Licensee. Sony shall have the right, but no obligation, to
subcontract any phase of production of any or all of the Licensed Products
or any part thereof.
7.1.2 Creation of Master CD-ROM. Following approval by Sony
of each Licensed Product pursuant to Section 5.2, Licensee shall provide
Sony with two (2) copies (in the form of CD write-once discs or such other
form as may be requested by Sony in the Specifications) of the pre-
production Executable Software for the original master CD-ROM (the "Master
CD-ROM") from which all other copies of the Licensed Product are to be
replicated. Promptly following such receipt of such samples, Sony shall
create the Master CD-ROM from one (1) such sample of the pre-production
Executable Software in compliance with specifications effective at the time
of replication. Licensee shall be responsible for the costs, as set forth in
the Specifications, of creating such Master CD- ROM. In order to insure
against loss or damage to the copies of the Executable Software furnished to
Sony, Licensee will retain duplicates of all such Executable Software. Sony
shall not be liable for loss of or damage to any copies of the Executable
Software.
7.1.3 Delivery of Printed Materials. Licensee shall deliver
the film for all Printed Materials to Sony or at Sony's option to Sony's
designated manufacturing facility in accordance with the Specifications, at
Licensee's sole risk and expense. In the event that Licensee elects to be
responsible for manufacturing the Printed Materials, Licensee shall deliver
such Printed Materials, in the minimum order quantities set forth in Section
7.2.2 below.
7.1.4 Manufacture of Units. Upon approval, pursuant to
Section 5, of such pre-production samples of the Executable Software for the
Master CD-ROM and the associated Artwork. Sony will, in accordance with the
terms and conditions set forth in this Section 7 and at Licensee's expense
(a) manufacture units of the Licensed Product for Licensee; (b) manufacture
Licensee's Packaging and inserts (subject to Licensee's right to manufacture
its own Printed Materials at Licensee's sole cost and expense); and (c)
package the CD-ROMs with the Printed Materials.
7.2 Price, Payment and Terms.
7.2.1 Price. The applicable price for manufacture of any
units of the Licensed Products ordered hereunder shall be determined by Sony
and provided to Licensee in the Specifications prior to manufacture of the
Licensed Products. Such price shall be based on the (subject to Section
7.1.4 above), provided by Sony.
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Purchase price(s) shall be stated in United States dollars
and are subject to change by Sony at any time upon reasonable written notice
to Licensee; provided, however, the applicable price shall not be changed
with respect to any units of the Licensed Products which are the subject of
an effective purchase order but which have not yet been delivered by Sony at
the designated F.O.B. point. Prices for the finished units of the Licensed
Products are exclusive of any foreign or U.S. federal, state, or local sales
or value-added tax, use, excise, customs duties or other similar taxes or
duties, which Sony may be required to collect or pay as a consequence of the
sale or delivery of any units of the Licensed Products to Licensee.
Licensee shall be solely responsible for the payment or reimbursement of any
such taxes, fees, and other such charges or assessments applicable to the
sale and/or purchase of any finished units of any of the Licensed Products.
7.2.2 Orders. Licensee shall issue to Sony written purchase
order(s) in accordance with the Specifications. Such orders shall reference
this Agreement, give Licensee authorization number, specify quantities by
Licensed Product, state requested delivery date and all packaging
information and be submitted on or with an order form to be provided in the
Specifications. All purchase orders shall be subject to acceptance by Sony.
Licensee shall issue to Sony, for each of the Licensed Products approved by
Sony pursuant to Section 5.1, a non-cancelable Purchase Order for at least
one thousand (1,000) units of such Licensed Product. In the event that Sony
manufactures the Printed Materials for the Licensee pursuant to Section
7.1.3 above, Licensee may, at Licensee's option, allow Sony to purchase an
additional 20% of such Printed Materials at Licensee's expense in
anticipation of reorders. Licensee agrees that such Printed Materials will
be stored by Sony for a period of no more than ninety (90) days. Licensee
may order additional units of any of such Licensed Products in the minimum
reorder quantity of one thousand (1,000) units per order, provided that
reorder quantities may be less than one thousand (1,000) units per order
(but in no event less than one hundred (100) units per order), in Sony's
sole discretion, in the event that either (i) Sony has additional quantities
of Printed Materials in stock with respect to any such Licensed Product, or
(ii) Licensee agrees to provide its own Printed Materials in accordance with
Section 7.1.3 above. Licensee shall have no right to cancel or reschedule
any Purchase Order (or any portion thereof) for any of the Licensed Products
unless the parties shall first have reached mutual agreement as to
Licensee's financial liability with respect to any desired cancellation or
rescheduling of any such Purchase Order (or any portion thereof).
7.2.3 Payment Terms. Orders will be invoiced upon shipment,
and will include royalties payable pursuant to Section 9 hereto. Each
invoice will be paid within thirty (30) days of the date of the invoice.
No other deduction may be made from remittances unless an approved credit
memo has been issued by Sony. No claim for credit due to shortage or
breakage will be allowed unless it is made within seven (7) days from the
date of receipt of shipment. Each shipment of Licensed Products to Licensee
shall constitute a separate sale obligating Licensee to pay therefore,
whether said shipment be whole or partial fulfillment of any order. All
sums owed or otherwise payable to Sony under this Section 7 and under Section
9 hereto shall bear interest at 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 upon which payment of the same shall first
become due up to and including the date of payment thereof whether before or
after judgment. Licensee shall be additionally liable for all of Sony's costs
and expenses of collection, including, without limitation, reasonable fees
for attorneys and court costs. Notwithstanding the foregoing, such specified
rate of interest shall not excuse or be construed as a waiver of Licensee's
obligation to timely provide any and all payments owed to Sony hereunder.
7.3 Delivery of Licensed Products. Sony shall have no obligation to
store completed units of Licensed Products. Delivery of Licensed Products
shall be in accordance with the Specifications. Title, risk of loss, or
damage in transit to any and all Licensed Products manufactured by Sony
pursuant to Licensee's orders shall vest in Licensee immediately upon
delivery to the carrier.
7.4 Technology Exchange and Quality Assurance. There will be no
technology exchange between Sony and Licensee under this Agreement. Due to
the proprietary nature of the mastering process, Sony will not under any
circumstances release any master discs or other in-process materials to the
Licensee. All such physical master discs, stampers, etc. shall be and remain
the sole property of Sony.
7.5 Inspection and Acceptance. Licensee may inspect and test any
units of the Licensed Products at Licensee's receiving destination. Any
finished units of the Licensed Products which fail to conform to the
Specifications and/or any descriptions contained in this Agreement may be
rejected by Licensee by providing written notice thereof to Sony within
thirty (30) days of receipt of such units of the Licensed Products at
Licensee's receiving destination. In such event, the provisions of Section
11.4 regarding Sony's warranty of the units shall apply with respect to any
such rejected units of the Licensed Products. Notwithstanding the provisions
of Section 11.4.1 hereto, if Licensee fails to properly reject any units of
the Licensed Products within such thirty (30) day period, such Licensed
Product units shall be deemed accepted by Licensee and may not be
subsequently rejected.
8. Marketing and Distribution.
In accordance with the provisions of this License Agreement, Licensee
shall, at no expense to Sony, diligently market, sell and distribute the
Licensed Products, and shall use its reasonable best efforts to stimulate
demand for such Licensed Products in the Licensed Territory and to supply
any resulting demand subject to timely manufacture by Sony. Licensee 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. Such methods of protection may include, without
limitation, markings or insignia providing identification of authenticity and
packaging seals. Subject to availability, Licensee shall sell to Sony
quantities of the Licensed Products at as low a price and on terms as
favorable as Licensee sells similar quantities of the Licensed Products to
the general trade; provided, however, Sony shall not directly or indirectly
resell any such units of the Licensed Products within the Licensed Territory
without Licensee's prior
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written consent.
9. Royalties.
Licensee shall pay Sony a per unit royalty in United States dollars, as
set forth on Exhibit B hereto, for each unit of the Licensed Products
manufactured. Payment of such royalties shall be made to Sony in conjunction
with the payment to Sony of the manufacturing costs for each unit and
pursuant to the payment terms of Section 7.2.3 hereto. No costs incurred in
the development, manufacture, marketing, sale, and/or distribution of the
Licensed Products shall be deducted from any royalties payable to Sony
hereunder
Similarly, there shall be no deduction from the royalties
otherwise owed to Sony hereunder as a result of any uncollectible accounts
owed to Licensee, or for any credits, discounts, allowances or returns which
Licensee 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 Licensee in connection with
its sale and/or distribution of any units of the Licensed Products and/or
arising with respect to the payment of royalties hereunder. In addition to
the royalty payments provided to Sony hereunder, Licensee shall be solely
responsible for and bear any cost relating to any withholding taxes and/or
other such assessments which may be imposed by any governmental authority
with respect to the royalties paid to Sony hereunder. Licensee shall provide
Sony with official tax receipts or other such documentary evidence issued by
the applicable tax authorities sufficient to substantiate that any such
taxes and/or assessments have in fact been paid.
10. Representations and Warranties.
10.1 Representations and Warranties of Sony. Sony represents and
warrants solely for the benefit of Licensee that: (i) Sony has the right,
power and authority to enter into this License Agreement, to grant rights to
Licensee and to fully perform its obligations hereunder
10.2 Representations and Warranties of Licensee. Licensee represents
and warrants that: (i) there is no threatened or pending action, suit, claim
or proceeding alleging that the use by Licensee of all or any part of the
Licensee Software 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 Licensee in or to the Licensee
Software or any underlying work or content embodied therein, or any name,
designation or trademark used in conjunction with the Licensed Products; (ii)
Licensee has the right, power and authority to enter into this License
Agreement and to fully perform its obligations hereunder; (iii) the making of
this License Agreement by Licensee does not violate any separate agreement,
rights or obligations existing between Licensee and any other person or
entity, and, throughout the term of this License Agreement, Licensee shall
not make any separate agreement with any person or entity that is
inconsistent with any of the provisions of this License Agreement; (iv)
Licensee shall not make any representation or give any warranty to any person
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or entity expressly or impliedly on Sony's behalf, or to the effect that the
Licensed Products are connected in any way with Sony (other than that the
Licensed Products have been developed, marketed, manufactured, sold, and/or
distributed under license from Sony), (v) the Executable Software shall be
distributed by Licensee solely in object code form; (vi) each of the Licensed
Products shall be marketed, sold, and distributed in an ethical manner and in
accordance with all applicable laws and regulations; and (vii) Licensee's
policies and practices with respect to the marketing, sale, and/or
distribution of the Licensed Products shall in no manner reflect adversely
upon the name, reputation or goodwill of Sony.
11. Indemnities; Limited Liability.
11.1 Indemnification by Sony. Sony shall indemnify and hold Licensee
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 a breach of any of the warranties provided by Sony
herein; provided, however, that Licensee shall give prompt written notice to
Sony of the assertion of any such claim, and provided, further, that Sony
shall have the right to select counsel and control the defense and/or
settlement thereof, subject to the right of Licensee to participate in any
such action or proceeding at its own expense with counsel of its own
choosing. Sony 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 Sony.
Licensee agrees to provide Sony, at no expense to Licensee, reasonable
assistance and cooperation concerning any such matter; and Licensee shall
not agree to the settlement of any such claim, action or proceeding without
Sony's prior written consent. If Licensee is joined as a party to
any lawsuit initiated by or against Sony, Sony shall indemnify and
hold Licensee harmless from and against all claims, losses,
liabilities, damages, expenses and costs, including, without
limitation, reasonable fees for attorneys and court costs, incurred
in connection with any such lawsuit.
11.2 Indemnification by Licensee. Licensee shall indemnify and hold
Sony harmless from and against any and all claims, losses, liabilities,
damages, expenses and costs, including, without limitation, reasonable fees
for attorneys, expert witnesses and litigation costs, and including costs
incurred in the settlement or avoidance of any such claim, which result from
or are in connection with (i) a breach of any of the representations or
warranties provided by Licensee herein, including without limitation claims
resulting from Licensee's failure to timely pay, any withholding taxes or
other assessments as set forth in Section 9 hereto or any breach of
Licensee's confidentiality obligations as set forth in Section 14 hereto; or
(ii) any claim of infringement or alleged infringement of any third party's
Intellectual Property Rights with respect to the Licensee Software; or (iii)
any claims of or in connection with any bodily injury (including death) or
property damage, by whomsoever such claim is made, arising out of, in whole
or in part, the manufacture, sale, and/or use of any of the Licensed
Products manufactured by Sony hereunder, unless due to the negligence of
Sony in performing any of the specific duties and/or providing any of the
specific manufacturing services required of it hereunder; provided, however,
that Sony shall give prompt written notice to Licensee of the assertion of
any such claim, and provided, further, that Licensee shall have the right to
select counsel and control the defense and/or settlement thereof, subject to
the right of Sony to participate in any such action or proceeding at its own
expense with counsel of its own choosing. Licensee shall have the exclusive
right, at its discretion, to commence and/or prosecute at its own expense
any lawsuit or to take such other action with respect to such matter as
shall be deemed appropriate by Licensee. Sony shall provide Licensee, at no
expense to Sony, reasonable assistance and cooperation concerning any such
matter. If Sony is joined as a party to any lawsuit initiated by or against
Licensee, Licensee shall indemnify and hold Sony harmless from and against
all claims, losses, liabilities, damages, expenses and costs, including,
without limitation, reasonable fees for attorneys and court costs, incurred
in connection with any such lawsuit. Sony shall not agree to the settlement
of any such claim, action or proceeding without Licensee's prior written
consent.
11.3 Limitation of Liability; Licensee's Obligations.
11.3.1 Limitation of Sony's Liability. IN NO EVENT SHALL SONY OR
ITS AFFILIATES, SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE
FOR PROSPECTIVE PROFITS, OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION THE BREACH OF THIS AGREEMENT BY SONY, THE MANUFACTURE OF THE
LICENSED PRODUCTS AND THE USE OF THE LICENSED PRODUCTS BY LICENSEE OR ANY
END-USER, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),
INDEMNITY, PRODUCT LIABILITY OR OTHERWISE. IT IS THE RESPONSIBILITY OF
LICENSEE TO REVIEW THE ACCURACY OF THE DATA ON THE UNITS MANUFACTURED BY SONY
FOR LICENSEE. IN NO EVENT SHALL SONY'S LIABILITY ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY LIABILITY
FOR DIRECT DAMAGES, AND INCLUDING WITHOUT LIMITATION ANY LIABILITY UNDER
SECTION 11.1 AND ANY WARRANTY IN SECTION 11.4 HERETO, EXCEED THE TOTAL AMOUNT
PAID BY LICENSEE TO SONY UNDER THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH
HEREIN, NEITHER SONY, NOR ANY AFFILIATE, NOR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, SHALL BEAR ANY RISK, OR HAVE ANY
RESPONSIBILITY OR LIABILITY, OF ANY KIND TO LICENSEE OR TO ANY THIRD PARTIES
WITH RESPECT TO THE QUALITY AND/OR PERFORMANCE OF ANY PORTION OF THE SONY
MATERIALS OR THE LICENSED PRODUCTS, INCLUDING, WITHOUT LIMITATION, THE
OPERATION OR PERFORMANCE OF ANY OF THE LICENSED PRODUCTS.
11.3.2 Limitation of Licensee's Liability. IN NO EVENT SHALL
LICENSEE OR ITS AFFILIATES, SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR
AGENTS BE LIABLE TO SONY FOR ANY PROSPECTIVE PROFITS, OR SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES ARISING OUT OF 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 OBJECT CODE PROVIDED BY SONY, IN WHOLE OR
IN PART, OR ANY LICENSEE SOFTWARE BY LICENSEE OR ANY THIRD PARTY, WHETHER
UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT
LIABILITY OR OTHERWISE, PROVIDED THAT LICENSEE EXPRESSLY AGREES THAT SUCH
LIMITATIONS SHALL NOT APPLY TO DAMAGES RESULTING FROM LICENSEE'S BREACH OF
SECTIONS 2, 4, 11.2, 12.2 OR 14 OF THIS AGREEMENT, AND PROVIDED FURTHER THAT
SUCH LIMITATIONS SHALL NOT APPLY TO AMOUNTS WHICH LICENSEE MAY BE REQUIRED TO
PAY TO THIRD PARTIES UNDER SECTIONS 11.2 OR 17.9.
11.3.3 Licensee's Obligations. If at any time or times
subsequent to the approval of the Executable Software pursuant to Section
5.2, Sony identifies any bugs with respect to the Licensed Product or any
bugs are brought to the attention of Sony, Licensee shall, at no cost to
Sony, promptly correct any such bugs, to Sony's reasonable satisfaction. In
the event any units of any of the Licensed Products create any risk of loss
or damage to any property or injury to any person, Licensee shall
immediately take effective steps, at Licensee's sole liability and expense,
to recall and/or to remove such defective product units from any affected
channels of distribution. Licensee shall provide all end-user support for
the Licensed Products.
11.4 Warranties, Disclaimer of Warranties.
11.4.1 Manufacturing Warranty. Sony warrants that the units that
are manufactured by Sony for Licensee pursuant to Section 7 of this Agreement
shall, at time of delivery to Licensee, be free from . The sole
obligation of Sony under this warranty shall be, for a period of from
the date of shipment of such discs by Sony to Licensee, at Sony's election,
either to replace, to issue credit, or to refund to Licensee the purchase
price paid to Sony for any such defective discs. Such warranty is the only
warranty applicable to the Licensed Product manufactured by Sony for Licensee
pursuant to Section 7 of this Agreement. This warranty shall not apply to
damage resulting from accident, alteration, negligence or misuse of the
Licensed Products. If, during the aforesaid period, a defective disc is
received by Licensee, Licensee shall notify Sony and, upon request by Sony,
provide Sony with the returned disc(s) and a written description of the
defect claimed. Sony shall not accept the return of any disc(s) except
(i.e., those discs that are not free from and all such
returns must be authorized by Sony in writing and in advance. All discs for
which return is authorized will be sent to a place designated by Sony at
Sony's expense. If the defect did not arise from causes in shipping,
processing and analyzing the discs, Sony's judgment as to the shall
be final and binding.
11.4.2 Disclaimer of Warranty. EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH ABOVE, NEITHER SONY NOR ITS AFFILIATES AND SUPPLIERS MAKE, NOR DOES
LICENSEE RECEIVE, ANY WARRANTIES, EXPRESS, IMPLIED OR STATUTORY REGARDING THE
SONY MATERIALS AND THE PLAYER AND/OR THE UNITS OF THE LICENSED PRODUCTS
MANUFACTURED HEREUNDER. SONY SHALL NOT BE LIABLE FOR ANY INJURY, LOSS OR
DAMAGE, DIRECT OR CONSEQUENTIAL, ARISING OUT OF THE USE OR INABILITY TO USE
THE UNITS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SONY AND ITS
AFFILIATES AND SUPPLIERS EXPRESSLY DISCLAIM THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND THEIR EQUIVALENTS
UNDER THE LAWS OF ANY JURISDICTION, REGARDING THE SONY MATERIALS AND THE
PLAYER AND/OR THE UNITS MANUFACTURED HEREUNDER. ANY WARRANTY AGAINST
INFRINGEMENT THAT MAY BE PROVIDED IN SECTION 2-312(3) OF THE UNIFORM
COMMERCIAL CODE AND/OR IN ANY OTHER COMPARABLE STATUTE IS EXPRESSLY
DISCLAIMED.
12. Copyright, Trademark and Trade Secret Rights.
12.1 Licensee Rights. The copyrights with respect to the Licensee
Software (exclusive of the rights licensed from Sony hereunder) and any
names or other designations used as titles for the Licensed Products are and
shall be the exclusive property of Licensee or of any third party from which
Licensee has been granted the license and related rights to develop and
otherwise exploit any such Licensee Software or any such names or other
designations.
12.2 Sony Rights.
12.2.1 Licensed Trademarks. The Licensed Trademarks and the
goodwill associated therewith are and shall be the exclusive property of
Sony. Nothing herein shall give Licensee any right, title or interest in or
to any of the Licensed Trademarks, other than the non-exclusive license and
privilege during the term hereof to display and use the Licensed Trademarks
solely in accordance with the provisions of this License Agreement.
Licensee shall not do or cause to be done any act or thing in any way
impairing or tending to impair any of Sony's rights, title, or interests in
or to any of the Licensed Trademarks, nor shall Licensee register any
trademark in its own name or in the name of any other person or entity which
is similar to or is likely to be confused with any of the Licensed
Trademarks.
12.2.2 License of Sony Materials and Player. Subject to the
rights granted by Sony to Licensee hereunder, all rights with respect to the
Sony Materials and Player, including, without limitation, all of Sony's
Intellectual Property Rights therein, are and shall be the exclusive
property of Sony. Nothing herein shall give Licensee any right, title or
interest in or to the Sony Materials or the Player (or any portion thereof),
other than the non-exclusive license and privilege during the term hereof to
use the Sony Materials and Player for the development of the Executable
Software solely in accordance with the provisions of this License Agreement.
Licensee shall not do or cause to be done any act or thing contesting or in
any way impairing or tending to impair any of Sony's rights, title, and/or
interests in or to the Sony Materials or the Player (or any portion
thereof).
12.3 Effect of Termination. Upon the expiration or earlier termination
of this License Agreement for any reason, Licensee shall immediately cease
and desist from any further use of the Licensed Trademarks and Sony
Materials licensed hereunder, subject to the provisions of Section 16.3,
below.
13. Copyright, Trademark and Trade Secret Protection.
In the event that either Licensee or Sony discovers or otherwise
becomes aware that any of the Intellectual Property Rights of the other
embodied in any of the Licensed Products have been or are being infringed
upon by any third party, then the party with knowledge of such infringement
or apparent infringement shall promptly notify the other party.
14. Confidentiality.
14.1 Nondisclosure Agreement. Licensee hereby acknowledges that the
Nondisclosure Agreement dated November 2, 1993 between Sony and Licensee
("Nondisclosure Agreement") will remain in full force and effect with
respect to the Confidential Information of Sony throughout the term of this
Agreement. In the event of any conflict or inconsistency between the
provisions of the Nondisclosure Agreement and the provisions of this Section
14, the provisions of the Nondisclosure Agreement shall control with respect
to the Confidential Information of Sony.
14.2 Confidential Information. For the purposes of this License
Agreement, "Confidential Information" of Sony means (i) the Sony Materials
and information regarding Sony's finances, business, marketing and technical
plans, (ii) all documentation and information relating to the foregoing
(other than documentation and information expressly intended for use by and
released to end users or the general public), and (iii) any and all other
information, of whatever type and in whatever medium (including without
limitation all data, ideas, discoveries, developments, know-how, trade
secrets, inventions, creations and improvements), that is disclosed in
writing or in any other form by Sony to Licensee. "Confidential
Information" of Licensee shall mean (i) the Licensee Software as provided to
Sony pursuant to this License Agreement, (ii) information regarding Licensee,
(iii) all documentation and information relating to the foregoing (other
than documentation and information expressly intended for use by and released
to end users or the general public), and (iv) any and all other information,
of whatever type and in whatever medium (including without limitation all
data, ideas, discoveries, developments, know-how, trade secrets, inventions,
creations and improvements), that is disclosed in writing or in any other
form by Licensee to Sony if the information is designated as (or is provided
under circumstances indicating the information is) confidential or
proprietary.
CONFIDENTIAL
14.3 Preservation of Confidentiality; Non-Disclosure. Each party
("receiving party") shall hold all Confidential Information of the other
party ("disclosing party") in trust and in strict confidence for the sole
benefit of the disclosing party and for the exercise of the limited rights
expressly granted to the receiving party under this License Agreement. The
receiving party shall take all steps necessary to preserve the
confidentiality of the Confidential Information of the disclosing party, 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,
including but not limited to those steps that the receiving party takes to
protect the confidentiality of its own most highly confidential information.
Except as may be expressly authorized by the disclosing party in writing,
the receiving party shall not at any time, either before or after any
termination of this License Agreement, directly or indirectly: (i) disclose
any Confidential Information to any person other than an employee or
subcontractor of the receiving party who needs to know or have access to
such Confidential Information for the purposes of this License Agreement,
and only to the extent necessary for such purposes (and with respect to any
subcontractor, only in accordance with Section 17.5 below); (ii) except as
otherwise provided in this License Agreement, duplicate the Confidential
Information for any purpose whatsoever; (iii) use the Confidential
Information for any reason or purpose other than as expressly permitted in
this License Agreement; or (iv) remove any copyright notice, trademark
notice and/or other proprietary legend set forth on or contained within any
of the Confidential Information.
14.4 Obligations Upon Unauthorized Disclosure.
14.4.1 Notice to Disclosing Party. If at any time the receiving
party becomes aware of any unauthorized duplication, access, use, possession
or knowledge of any Confidential Information, the receiving party shall
immediately notify the disclosing party. The receiving party shall provide
any and all reasonable assistance to the disclosing party to protect the
disclosing party's proprietary rights in any Confidential Information that
the receiving party 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 License Agreement including but not limited
to enforcement of confidentiality agreements, commencement and prosecution
in good faith (alone or with the disclosing party) of legal action, and
reimbursement for all reasonable attorneys' fees (and all related costs),
costs and expenses incurred by the disclosing party to protect its
proprietary rights in the Confidential Information. The receiving party
shall take all reasonable steps requested by the disclosing party to prevent
the recurrence of any unauthorized duplication, access, use, possession or
knowledge of the Confidential Information.
14.4.2 Accounting, Etc. If either party violates or fails to
comply with any of the terms or conditions of this Section 14 or Section 4
hereto, the other party shall be entitled to an accounting and repayment of
all forms of compensation, commissions, remuneration or benefits which the
violating party directly or indirectly realizes as a result of or in
connection with any such violation or failure to comply. Such remedy shall
be in addition to and not in limitation of any injunctive relief or other
remedies to which the disclosing party may be entitled under this Agreement
or otherwise, at law or in equity.
14.5 Exceptions. The foregoing restrictions will not apply to
information to the extent that the receiving party can demonstrate such
information: (i) was known to the receiving party at the time of disclosure
to the receiving party by the disclosing party as shown by the files of the
receiving party in existence at the time of disclosure; (ii) becomes part of
information in the public domain through no fault of the receiving party;
(iii) has been rightfully received from a third party authorized by the
disclosing party to make such disclosure without restriction; (iv) has been
approved for release by prior written authorization of the disclosing party;
or (v) has been disclosed by court order or as otherwise required by law
(including without limitation to the extent that disclosure may be required
under Federal or state securities laws), provided that the receiving party
has notified the disclosing party promptly upon learning of the possibility
of any such court order or legal requirement and has given the disclosing
party a reasonable opportunity (and cooperated with the disclosing party) to
contest or limit the scope of such required disclosure (including
application for a protective order). Information shall not be deemed known
to the receiving party or publicly known for purposes of the above
exceptions (A) merely because it is embraced by more general information in
the prior possession of the receiving party or others, or (B) merely because
it is expressed in public material in general terms not specifically the
same as Confidential Information.
14.6 Confidentiality of Agreement. Subject to Section 14.5 above, the
terms and conditions of this License Agreement shall be treated as
Confidential Information; provided that each party may disclose the terms
and conditions of this License Agreement: (i) to legal counsel; (ii) in
confidence, to accountants, banks and financing sources and their advisors;
and (iii) in confidence, in connection with the enforcement of this License
Agreement or rights under this License Agreement and (iv) without limiting
the requirements set forth in clause (v) of Section 14.5 hereto, the parties
agree that if either of them shall be required, in the opinion of counsel,
to file publicly or otherwise disclose the terms of this License Agreement
under applicable federal and/or state securities laws, such party shall
request, and shall use its best efforts to obtain, confidential treatment
for such sections of this Agreement as the non-filing party may designate
after receiving the notice provided for in clause (v) of Section 14.5
hereof. Any failure to notify under clause (v) of Section 14.5 with respect
to clause (iv) of this section shall be deemed a breach of a material
obligation and be subject to termination pursuant to Sections 15.2 and 15.5
hereto. Both parties shall treat the fact that the parties have entered
into this License Agreement as Confidential Information until the initial
public announcement regarding this License Agreement is released by SEPC, at
its sole discretion, announcing that Licensee has become a licensee under
this License Agreement. Subsequent to such initial public announcement,
both parties may issue press releases subject to the prior written approval
of the other party, which shall not be unreasonably withheld.
15. Term and Termination.
15.1 Effective Date; Term. This License Agreement shall not be binding
upon the parties until it has been signed by or on behalf of each party, in
which event it shall be effective as of the date first written above (the
"Effective Date"). Unless sooner terminated in accordance with the
provisions hereof, the initial term of this License Agreement shall be for
four (4) years from the Effective Date, provided that the parties hereto
agree to commence good faith negotiations with respect to a renewal of such
term subsequent to from such Effective Date.
15.2 Termination by Sony. Sony shall have the right to terminate
this License Agreement immediately, by providing written notice of such
election to Licensee, upon the occurrence of any of the following events or
circumstances: (i) If Licensee breaches any of its material obligations
provided for in this License Agreement and such breach is not corrected or
cured within thirty (30) days after receipt of written notice of such
breach; or (ii) Licensee's failure to pay, or a statement that it is unable
to pay any amount due hereunder, or is unable to pay its debts generally as
they shall become due; or (iii) Licensee's filing of an application for, or
consenting to, or directing the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of all or substantially all
of Licensee's property, whether tangible or intangible, wherever located; or
(iv) The making by Licensee of a general assignment for the benefit of
creditors; or (v) The commencing by Licensee or Licensee's intention to
commence a voluntary case under any applicable bankruptcy laws (as now or
hereafter may be in effect); or (vi) The adjudication that Licensee is a
bankrupt or insolvent; or (vii) The filing by Licensee or the intent to file
by Licensee of a petition seeking to take advantage of any other law
providing for the relief of debtors; or (viii) Licensee's acquiescence to,
intention to acquiesce to, or failure to have dismissed within ninety (90)
days, any petition filed against it in any involuntary case under any such
bankruptcy law.
15.3 Product-by-Product Termination by Sony. In addition to the events
of termination described in Section 15.2, above, Sony, at its option, shall
be entitled to terminate, on a product-by-product basis, the licenses and
related rights herein granted to Licensee (a) in the event that Licensee
fails to notify Sony promptly in writing of any material change to any of
the elements approved in Section 5.1, above; (b) if Licensee fails to
provide Sony in accordance with the provisions of Section 5.2, above, with
the prototype Executable Software for any Licensed Product, in the format
required by Sony, and which meets Sony's specifications; provided, however,
Sony shall not be entitled to exercise such right of termination if
Licensee's failure to provide such final Executable Software for any of the
Licensed Products is directly caused by Sony's failure to timely comply with
any of its material obligations expressly set forth herein.
15.4 No Refunds. In the event of the termination of this License
Agreement in accordance with any of the provisions of Sections 15.2 or 15.3,
above, no portion of any payments of any kind whatsoever previously provided
to Sony hereunder shall be owed or be repayable to Licensee.
15.5 Termination of Licensee's Obligations. Licensee shall be relieved
of its obligations pursuant to Section 6.1 hereto, upon providing written
notice to Sony, if or
(ii) Licensee's failure to pay, or a statement that it is unable to pay any
amount due hereunder, or is unable to pay its debts generally as they shall
become due; or (iii) Licensee's filing of an application for or consenting
to, or directing the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of all or substantially all of
Licensee's property, whether tangible or intangible, wherever located; or
(iv) The making by Licensee of a general assignment for the benefit of
creditors; or (v) The commencing by Licensee or Licensee's intention to
commence a voluntary case under any applicable bankruptcy laws (as now or
hereafter may be in effect); or (vi) The adjudication that Licensee is a
bankrupt or insolvent; or (vii) The filing by Licensee or the intent to file
by Licensee of a petition seeking to take advantage of any other law
providing for the relief of debtors; or (viii) Licensee's acquiescence to
intention to acquiesce to, or failure to have dismissed within ninety (90)
days any petition filed against it in any involuntary case under any such
bankruptcy law.
16. Effect of Expiration or Termination.
16.1 Inventory Statement. Within thirty (30) days of the date of
expiration or the effective date of termination with respect to any or all
Licensed Products, Licensee shall provide Sony with an itemized statement,
certified to be accurate by an officer of Licensee, specifying the number of
CONFIDENTIAL
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. Sony
shall be entitled to conduct a physical inspection of Licensee's inventory
and work in process during normal business hours in order to ascertain or
verify such inventory and/or statement.
16.2 Reversion of Rights. If this License Agreement is terminated by
Sony as a result of any breach or default by Licensee, the licenses and
related rights herein granted to Licensee shall immediately revert to Sony,
and Licensee shall cease and desist from any further use of the Sony
Materials and any Intellectual Property Rights related to the Sony
Materials, and, subject to the provisions of Section 16.3, below, Licensee
shall have no further right to continue the development, marketing, sale,
and/or distribution of any units of the Licensed Products, nor to continue
to use the Licensed Trademarks.
16.3 Disposal of Unsold Units. Provided this License Agreement is not
terminated due to a breach or default by Licensee, Licensee may, upon
expiration or termination of this License Agreement, sell off existing
inventories of Licensed Products, on a non-exclusive basis, for a period of
from the date of expiration or termination of this
License Agreement, and provided such inventories have not been manufactured
solely or principally for sale during such period. Subsequent to the
expiration of such period, or in the event this
License Agreement is terminated as a result of any breach or default by
Licensee, any and all units of the Licensed Products remaining in Licensee's
inventory shall be destroyed by Licensee within five (5) working days of such
expiration or termination. Within five (5) working days after such
destruction, Licensee shall provide Sony with an itemized statement,
certified to be accurate by an officer of Licensee, 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.
16.4 Return of Confidential Information. Upon the expiration or
earlier termination of this License Agreement, Licensee and Sony shall
immediately deliver to the other party, as the disclosing party 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 License Agreement, including, without limitation, any such information,
knowledge, or know-how of which either party, as the receiving party, was
apprised and which was reduced to tangible or written form by such party or
in its behalf at any time during the term of this License Agreement.
16.5 Renewal or Extension of License Agreement. Other than as set
forth in Section 15.1 hereto, Sony shall be under no obligation to renew or
extend this License Agreement notwithstanding any actions taken by either of
the parties prior to the expiration of this License Agreement. Upon the
expiration of this License Agreement neither party shall be liable to the
other for any damages (whether direct, consequential, or incidental, and
including, without limitation, any expenditures, loss of profits, or
prospective profits) sustained or arising out of or alleged to have been
sustained or to have arisen out of such expiration. However, the expiration
CONFIDENTIAL
of this License Agreement shall not excuse either party from its previous
breach of any of the provisions of this License Agreement or from any
obligations surviving the expiration of this License Agreement, and full
legal and equitable remedies shall remain available for any breach or
threatened breach of this License Agreement or any obligations arising
therefrom.
16.6 Termination Without Prejudice. The expiration or termination of
this License Agreement in accordance with the provisions of Section 15,
above, shall be without prejudice to any rights or remedies which one party
may otherwise have against the other party.
17. Miscellaneous Provisions.
17.1 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, return receipt requested, or
sent by recognized international courier service (e.g., Federal Express,
DHL, etc.), telex, telegram or facsimile, with charges prepaid and subject
to confirmation by letter sent via registered or certified mail, postage
prepaid, return receipt requested. The address for all notices or other
communications required to be sent to Sony or Licensee, respectively, shall
be the mailing address stated in the preamble hereof, or such other address
as may be provided by written notice from one party to the other on at least
ten (10) days' prior written notice. In the case of Licensee, a copy of any
such notice shall be sent to Fischbach, Perlstein & Yanny, 1925 Century Park
East, Suite 1260, Los Angeles, CA 90067. Any such notice shall be effective
upon the date of receipt.
17.2 Force Majeure. Neither Sony nor Licensee shall be liable for any
loss or damage or be deemed to be in breach of this License Agreement if its
failure to perform or failure to cure any of its obligations under this
License 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 caused by such force
majeure event; strike or other industrial dispute; war or rebellion; or
compliance with any law, regulation, or order (whether valid or invalid) of
any governmental body, other than an order, requirement, or instruction
arising out of Licensee's violation of any applicable law or regulation;
provided, however, that the party interfered with gives the other party
written notice thereof promptly, and, in any event, within fifteen (15)
working days of discovery of any such Force Majeure condition. If notice of
the existence of any Force Majeure condition is provided within such period,
the time for performance or cure shall be extended for a period equal to the
duration of the Force Majeure event or circumstance described in such
notice, except that any such cause shall not excuse the payment of any sums
owed to Sony prior to, during, or after any such Force Majeure condition.
17.3 No Partnership or Joint Venture. The relationship between Sony
and Licensee, respectively, is that of licensor and licensee. Both parties
are independent contractors and are not the legal representative, agent,
joint venturer, partner, or employee of the other party for any purpose
whatsoever. Neither party has any right or authority to assume or create any
obligations of any kind or to make any representation or warranty on behalf
of the other party, whether express or implied, or to bind the other party
in any respect whatsoever.
17.4 Assignment. Sony has entered into this License Agreement based
upon the particular reputation, capabilities and experience of Licensee and
its officers, directors and employees. Accordingly, Licensee may not assign
this License Agreement or any of its rights hereunder, nor delegate or
otherwise transfer any of its obligations hereunder, to any third party
unless the prior written consent of Sony shall first be obtained. Any
attempted or purported assignment, delegation or other such transfer without
the required consent of Sony shall be void and a material breach of this
License Agreement. Subject to the foregoing, this License Agreement shall
inure to the benefit of the parties and their respective successors and
permitted assigns. Sony shall have the right to assign any and all of its
rights and obligations hereunder to any affiliate(s), including, without
limitation, its obligations under Section 7 hereof.
17.5 Subcontractors. Licensee shall not sell, assign, delegate,
subcontract, sublicense or otherwise transfer or encumber all or any portion
of the licenses herein granted. Licensee shall have the right to employ
suitable subcontractors for the purposes of assisting Licensee with the de-
velopment of the Licensed Products, provided that prior notice is given to
Sony prior to subcontracting so that Sony may determine its status with such
subcontractors pursuant to the terms of the next sentence hereto. Licensee
shall not disclose to any subcontractor any Confidential Information of Sony
(as defined herein and in the Nondisclosure Agreement), including, without
limitation, any Sony Materials, unless and until such subcontractor shall
have signed either (i) a License Agreement and a Development Tool Agreement
or (ii) a Licensed Developer Agreement, directly with Sony. Licensee shall
remain fully liable for its compliance with all of the provisions of this
License 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 17.5. Licensee shall cause its
subcontractors to comply in all respects with the terms and conditions of
this License Agreement, and hereby unconditionally guarantees all obligations
of its subcontractors.
17.6 Compliance with Applicable Laws. The parties shall at all times
comply with all applicable regulations and orders of their respective
countries and all conventions and treaties to which their countries are a
party or relating to or in any way affecting this License Agreement and the
performance by the parties of this License 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 License Agreement binding, including, without
limitation, the recording of this License Agreement with any appropriate
governmental authorities (if required).
17.7 Governing Law; Consent to Jurisdiction. This License Agreement
shall be governed by and interpreted in accordance with the laws of the
State of New York, 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 License Agreement or to adjudicate any dispute arising
hereunder shall be brought in the courts of the County of New York, State of
New York (if under State law) or the Southern District of New York (if under
Federal law). 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, without limiting other types of service of process permitted by
law, any service of process may be effected by registered or certified mail,
postage prepaid, return receipt requested at the addresses stated in the
preamble hereof.
17.8 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 License Agreement or to file or defend any action arising out
of this Agreement, then the prevailing party in any such action shall be
entitled, in addition to any other rights and remedies available to it at
law or in equity to recover from the other party its reasonable fees for
attorneys and expert witnesses, plus such court costs and expenses as may be
fixed by any court of competent jurisdiction. The term "prevailing party"
for the purposes of this Section shall include a defendant who has by
motion, judgment, verdict or dismissal by the court, successfully defended
against any claim that has been asserted against it.
17.9 Remedies. Unless expressly set forth to the contrary, either
party's election of any remedies provided for in this License Agreement
shall not be exclusive of any other remedies available hereunder or
otherwise at law or in equity, and all such remedies shall be deemed to be
cumulative. Any breach of Sections 2, 4, 5, 6, 7.1.1, 12 and 14 of this
Agreement would cause irreparable harm to Sony, the extent of which would be
difficult to ascertain. Accordingly, Licensee agrees that, in addition to
any other remedies to which Sony may be entitled, in the event of a breach
by Licensee or any of its employees or permitted subcontractors of any such
sections of this Agreement, Sony shall be entitled to the immediate issuance
without bond of exparte injunctive relief enjoining any breach or threatened
breach of any or all of such provisions. In addition, Licensee shall
indemnify Sony for all losses, damages, liabilities, costs and expenses
(including actual attorneys' fees and all related costs) which Sony may
sustain or incur as a result of such breach.
17.10 Severability. In the event that any provision of this
License Agreement (or portion thereof) is determined by a court of competent
jurisdiction to be invalid or otherwise unenforceable, such provision (or
part 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 License Agreement, while the remainder of
this License Agreement shall continue in full force and remain in effect
according to its stated terms and conditions.
17.11 Sections Surviving Expiration or Termination. The following
sections shall survive the expiration or earlier termination of this License
Agreement for any reason: 4, 7.2, 9, 10, 11, 12, 13, 14, 15.4, 16, 17.4,
17.5, 17.7, 17.8, 17.9, 17.10.
17.12 Waiver. No failure or delay by either party in exercising
any right, power, or remedy under this License Agreement shall operate as a
waiver of any such right, power, or remedy. No waiver of any provision of
this License 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 License Agreement shall not be
construed as a waiver of any other provision of this License Agreement, nor
shall such waiver operate as or be construed as a waiver of such provision
respecting any future event or circumstance.
17.13 Modification. No modification of any provision of this
License Agreement shall be effective unless in writing and signed by both of
the parties.
17.14 Headings. The section headings used in this License
Agreement are intended primarily for reference and shall not by themselves
determine the construction or interpretation of this License Agreement or
any portion hereof.
17.15 Integration. This License Agreement (together with the
Exhibits attached hereto) constitutes the entire agreement between Sony and
Licensee and supersedes all prior or contemporaneous agreements, proposals,
understandings, and communications between Sony and Licensee, whether oral
or written, with respect to the subject matter hereof; provided, however,
that notwithstanding anything to the contrary in the foregoing, the
Nondisclosure Agreement referred to in Section 14 hereto shall remain in
full force and effect.
17.16 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, and both of which
together shall constitute one and the same instrument.
17.17 Construction. This License Agreement shall be fairly
interpreted in accordance with its terms and without any strict construction
in favor of or against either of the parties.
IN WITNESS WHEREOF, the parties have caused this License Agreement to be
duly executed as of the day and year first written above.
SONY COMPUTER ENTERTAINMENT OF AMERICA ACCLAIM ENTERTAINMENT, INC.
By: /s/ James Whims By: /s/ Robert W. Holmes
Title: SR. V.P. Title: President
Date: 12/24/94 Date: 12/19/94
NOT AN AGREEMENT UNTIL
EXECUTED BY BOTH PARTIES
Exhibit A
LICENSED TERRITORY
1. Licensed Territory: United States and Canada
2. Additional Provisions:
(a) Distribution Channels. Licensee may, pursuant to the licenses
granted in Section 2 above, distribute Licensee's Licensed Products
throughout the Licensed Territory and may use such distribution channels
as Licensee deems appropriate, including the use of third party
distributors, resellers, dealers and sales representatives
(collectively, "Distributors").
(b) Limitations on Distribution. Notwithstanding any other provisions
in this License Agreement, Licensee shall not, directly or indirectly,
solicit orders from and/or sell any units of the Licensed Products to
any person or entity outside of the Licensed Territory, and Licensee
further agrees that it shall not directly or indirectly solicit orders
for and/or sell any units of the Licensed Products in any situation
where Licensee reasonably should know that such Licensed Products will
be exported or resold outside of the Licensed Territory.
(c) Changes to Licensed Territory. The licenses granted in Section 2
of this License Agreement may only be exercised by Licensee in the
Licensed Territory. Sony shall have the right to delete, and intends
to delete any country or countries from the Licensed Territory if, in
Sony's reasonable judgment, the laws or enforcement of such laws in
such country or countries do not protect Sony's Intellectual Property
Rights. In the event a country is deleted from the Licensed Territory,
Sony shall deliver to Licensee a notice stating the number of days
within which Licensee shall cease exercising such licenses in the
deleted country or countries. Licensee agrees to cease exercising such
licenses, directly or through subcontractors, in such deleted country
or countries, by the end of the period stated in such notice.
Exhibit B
ROYALTIES
A. Per Unit Royalty. The per unit royalty due under Section 9 of the
Agreement with respect to each Licensed Product shall be ,
unless otherwise set forth below with respect to a Licensed Product:
B. Adjustments to Royalty - Hit Title Rebate
(1) In the event that the total purchases by Licensee from Sony with
respect to any Licensed Product exceed the following numbers of units during
of the Licensed Product, Licensee shall be entitled to a rebate with
respect to royalties paid by Licensee to Sony pursuant to Section 9 of the
Agreement which shall be credited to Licensee's account 60 days following the
date that the relevant royalties are paid, as follows:
Volume Royalty Rebate
------ --------------
a. Over units are up to of Royalty paid with respect to such units
b. Over units are up to of Royalty paid with respect to such units
c. Over units are up to of Royalty paid with respect to such units
(2) Each title shall be considered independently for purposes of
calculating and the rebates shall be cumulative. By way of example:
a. If Licensee's aggregate shipments for a single Licensed Product are less
than units, no rebate is available.
b. If Licensee's aggregate shipments for a single Licensed Product exceed
but are less than , Licensee will be entitled to receive
of the Royalty paid as a rebate with respect to the units, at the time
Licensee is invoiced for such excess order, and shall thereafter be charged a
per unit royalty of less until units of the Licensed Product
shipped exceeds .
c. If Licensee's aggregate orders for a single Licensed Product exceed
but are less than , Licensee will receive of the Royalty
paid as a rebate with respect to the first , at the time Licensee is
invoiced for such excess order, and shall thereafter be charged a per unit
royalty of less until units of the Licensed Product shipped
exceed . Please note that in this case Licensee will only receive a
rebate with respect to the units because they have already
received a rebate on such units.
CONFIDENTIAL