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EXHIBIT 10.43
LICENSED DEVELOPER AGREEMENT
LICENSED DEVELOPER AGREEMENT, entered into as of January 26, 2000 (the
"Agreement" or "LDA"), by and between SONY COMPUTER ENTERTAINMENT AMERICA, a
division of Sony Computer Entertainment America Inc., with offices at 919 E.
Hillsdale Boulevard, Foster City, CA 94404 (hereinafter "SCEA"), and THE
LIGHTSPAN PARTNERSHIP, INC. with offices at 10140 Campus Point Drive, San Diego,
CA 92121 (hereinafter "Developer").
WHEREAS, SCEA and/or affiliated companies have developed a CD-based interactive
console for playing video games and for other entertainment purposes known as
the P1ayStation(R) game console (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, Developer has previously entered into a Developer Agreement, dated
January 26, 1996 ("Original Developer Agreement") with SCEA, which granted
Developer a non-exclusive license to develop Licensed Products (as defined
below) for the School Market and obtain Development Tools (as defined below)
from SCEA pursuant to the terms and conditions set forth in such Original
Developer Agreement, and such Original Developer Agreement will expire four (4)
years after the date of such Original Developer Agreement;
WHEREAS, Developer desires to replace its non-exclusive license to use Sony
Materials to develop and/or test Licensed Products (or portions thereof) and/or
obtain Development Tools from SCEA as set forth in the Original Developer
Agreement or Original Developer License Agreements with the licenses set forth
in this Agreement.
WHEREAS, SCEA is willing, on the terms and subject to the conditions of this
Agreement, to renew Developer's non-exclusive license to use Sony Materials to
develop Licensed Products solely for the School Market and/or provide
Development Tools to Developer in accordance with the terms and conditions of
this Agreement.
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, Developer and SCEA
hereby agree as follows:
1. DEFINITION OF TERMS.
1.1 "Affiliate of SCEA" means, as applicable, either Sony Computer
Entertainment Inc. in Japan, Sony Computer Entertainment Europe in the United
Kingdom or such other Sony Computer Entertainment entity as may be established
by Sony Computer Entertainment Inc. from time to time.
1.2 "Development Site(s)" means the site or sites set forth in Exhibit A
or which have been otherwise notified to SCEA in writing as locations where
Developer is authorized to develop Executable Software, subject to the
restrictions set forth in this Agreement. In no event shall the location of an
unlicensed developer be designated a Development Site and Developer shall bear
all risks, liability and responsibility relating to any development by an
unlicensed developer.
1.3 "Development Tools" means the Hardware Tools, Software Tools and
Documentation leased and licensed by SCEA to Developer pursuant to this
Agreement for use in the development of Executable Software.
1.4 "Documentation" means any document, including but not limited to the
SourceBook, Tool Catalog and electronic communications including those via the
Internet (e.g., BBS postings) regarding usage of the Hardware Tools or the
Software Tools and provided by SCEA or an Affiliate of SCEA to the Developer in
writing, on floppy discs, on CD-ROM discs or through electronic media.
1.5 "Executable Software" means Developer's object code software which
includes Licensed Developer Software and any software (whether in object code or
source code form) provided directly or indirectly by SCEA or an Affiliate of
SCEA which is intended to be combined with Licensed Developer Software for
execution on the Player and has the ability to communicate with the software
resident in the Player.
1.6 "Hardware Tools" means the hardware components of the Development
Tools described in the SourceBook, Tool Catalog or other Documentation which
were developed by SCEA or an Affiliate of SCEA for use in the creation of
Executable Software and shall include any revised, updated, modified or enhanced
version of the whole or any of the components thereof and any subsequently added
peripheral component(s) or device(s).
1.7 "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, trade dress, 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.
1.8 "Licensed Developer" means any developer which is licensed by SCEA
or an Affiliate of SCEA to develop Licensed Products pursuant to a valid and
then current Licensed Developer Agreement.
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1.9 "Licensed Developer Agreement" or "LDA" means a valid and current
agreement or renewal thereof between a Licensed Developer and SCEA, or an
equivalent such agreement between a Licensed Developer and an Affiliate of SCEA
(e.g., the LDA with SCEE).
1.10 "Licensed Developer Software" means a Licensed Developer's
application source or object code and data (including audio and video material)
developed by a Licensed Developer in accordance with its LDA, which, either by
itself or combined with other Licensed Developer Software, when integrated with
any software (whether in object code or source code form) provided by SCEA or an
Affiliate of SCEA, creates Executable Software.
1.11 "Licensed Products" means the Executable Software (which may be
combined with Executable Software of another Licensed Developer) which has been
approved by SCEA in accordance with the terms and conditions of a Licensed
Publisher Agreement, and which is embodied on CD-ROM media in the form of
PlayStation Discs.
1.12 "Licensed Publisher" means any publisher which is licensed by SCEA
or an Affiliate of SCEA to publish, have manufactured, market, distribute and
sell Licensed Products pursuant to a valid and then current Licensed Publisher
Agreement.
1.13 "Licensed Publisher Agreement" or "LPA" means a valid and current
agreement or renewal thereof between a Licensed Publisher and SCEA or an
equivalent such agreement between Publisher and an Affiliate of SCEA (e.g. the
LPA with SCEE).
1.14 "Licensed Territory" means the United States (including its
possessions and territories), Canada, and Mexico as may be modified and/or
supplemented by SCEA from time to time pursuant to Section 4.5 below.
1.15 "Licensed Trademarks" means the trademarks, service marks, trade
dress and logos designated by SCEA in the SourceBook or other documentation
provided by SCEA to Developer. Nothing contained in this Agreement shall in any
way grant Developer the right to use the trademark "Sony" in any manner as a
trademark, trade name, service mark or logo. SCEA may amend such Licensed
Trademarks from time to time in the SourceBook or other documentation provided
by SCEA to Developer or upon written notice to Developer.
1.16 "PlayStation Discs" means distinctive black PlayStation interactive
software CD-ROM discs compatible with the Player which are manufactured on
behalf of a Licensed Publisher and contain the Licensed Product.
1.17 "School Market" means distribution directly by Developer to and for
elementary and secondary (i.e. K-12) students, through distribution and sale to
elementary and secondary public and private schools in the Licensed Territory.
1.18 "Software Tools" means the software components of the Development
Tools described in the SourceBook, Tool Catalog or other Documentation which
were developed by SCEA or an Affiliate of SCEA for use in the creation of
Executable Software and which may be provided to the Developer by SCEA on floppy
discs, CD-ROM discs or through electronic media and shall also include any
revised, updated, modified or enhanced version of the whole or of any of the
parts thereof.
1.19 "Sony Materials" means any hardware, data, object code, source
code, documentation (or any part(s) of any of the foregoing), including without
limitation any portion or portions of the Development Tools, which are provided
or supplied by SCEA or an Affiliate of SCEA to Developer or any Licensed
Publisher and/or other Licensed Developer.
1.20 "SourceBook" means the SourceBook (or any other reference guide
containing information similar to the SourceBook but designated with a different
name) prepared by SCEA, which is provided separately to Developer. The
SourceBook is designed to serve as the first point of reference by Developer in
every phase of the development and approval of Licensed Products.
1.21 "Tool Catalog" means the PlayStation Development Tool Catalog
prepared by SCEA and provided separately to the Developer which contains a
description of the Development Tools and current pricing.
2. LICENSE GRANT AND PROVISION OF DEVELOPMENT TOOLS.
2.1 LICENSE. SCEA hereby grants to Developer, and Developer hereby
accepts, for the term of this Agreement, within the Licensed Territory, under
Intellectual Property Rights owned or licensed by SCEA, a non-exclusive,
non-transferable license, without the right to sublicense (except as
specifically provided herein), to use the object and source code version of any
Sony Materials (including without limitation, the Development Tools) in
accordance with the terms of this LDA internally as may reasonably be necessary
to develop Licensed Products (or portions of Licensed Products including, but
not limited to audio and video components thereof) solely for the School Market.
2.2 SOFTWARE TOOLS. SCEA hereby agrees to provide to Developer, and
Developer hereby accepts, for the term and subject to the conditions set forth
herein, the non-exclusive and non-transferable (except as specifically provided
herein) license to use the Software Tools and any related Documentation.
Developer will not, except as provided herein, permit, directly or indirectly,
any third party to use all or any part of the Software Tools or the
Documentation. Developer will only use the Software Tools internally (or, as
provided herein, externally pursuant to an agreement with another Licensed
Developer) for the sole purpose of developing or testing the Executable
Software (or portions thereof) in accordance with this
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LDA, and will only use the Documentation supplied with the Software Tools to
support such efforts. Developer shall not sell, lease, license or otherwise
transfer or dispose of the Software Tools, or permit any lien or other
encumbrance with respect to the Software Tools. Developer shall not make any
alterations, additions or modifications to the Software Tools without the
written permission of SCEA in its discretion, and, if such permission is
granted, Developer shall thereby grant to SCEA a perpetual, non-exclusive
license, with right to sublicense such alterations, additions or modifications.
Developer shall execute such additional documents as are reasonably necessary to
effectuate any such license. Developer may create its own tools and/or utilities
for use in conjunction with the Software Tools, and may license, distribute
and/or sell such tools or utilities to others, provided that such tools or
utilities and related documentation, if any, (i) shall not incorporate or be
derivative of any portion whatsoever of the Software Tools or the Documentation
or any other Sony Materials or Intellectual Property Rights of SCEA, and (ii)
shall be offered by Developer to SCEA on terms not less favorable than those
offered to any other person; and provided further that any assignment, license
or transfer by Developer of its rights in such tools and/or utilities to any
third party shall be subject to Developer's obligations herein, and Developer
shall be responsible for any violation of the terms of this Agreement by such
third party.
2.3 HARDWARE TOOLS. SCEA hereby agrees to lease to Developer, and
Developer hereby accepts, for the term and subject to the conditions set forth
herein, the Hardware Tools, and to provide to Developer the non-exclusive and
non-transferable (except as specifically provided herein) license to use the
Intellectual Property Rights contained in the Hardware Tools and any related
Documentation. Developer will only use the Hardware Tools internally (or, as
provided herein, externally pursuant to an agreement with another Licensed
Developer) for the sole purpose of developing or testing the Executable Software
(or portions thereof) in accordance with this LDA, and will only use the
Documentation supplied with the Hardware Tools to support such efforts. SCEA
shall retain title to the Hardware Tools, and Developer agrees to keep such
Hardware Tools free of all security interests, liens and other encumbrances.
Developer will not, except as provided herein, permit, directly or indirectly,
any third party to use all or any part of the Hardware Tools. Developer shall
not sell, lease, copy or otherwise transfer or dispose of the Hardware Tools.
Developer shall not make any alterations, additions or modifications to the
Hardware Tools without the written permission of SCEA in its discretion.
2.4 TECHNICAL SUPPORT. SCEA shall provide to Developer such technical
support as may be reasonably necessary to effectuate the license set forth in
Section 2.1 above. Unless otherwise determined by SCEA, the consideration for
Development Tools set forth in Section 3.1 shall include the cost of such
technical support.
2.5 DEVELOPMENT TOOLS PREVIOUSLY LEASED OR LICENSED TO DEVELOPER. Upon
full execution of this LDA by Developer and SCEA, any Development Tools
previously leased or licensed to Developer pursuant to an Original Developer
Agreement, Original Developer License Agreements or any other agreement between
SCEA and Developer shall be considered Development Tools under this Agreement,
and the terms and conditions of this Agreement shall apply to such previously
leased or licensed Development Tools as if such Development Tools were leased or
licensed hereunder. In addition, any Development Tools which Developer has
obtained from another Licensed Developer or Licensed Publisher or from a third
party prior to execution of this LDA shall, upon execution of this LDA, be
considered Development Tools under this Agreement, and the terms and conditions
of this Agreement shall apply to such Development Tools as if such Development
Tools were leased or licensed hereunder.
3. CONSIDERATION AND DELIVERY.
3.1 CONSIDERATION. SCEA agrees to provide such number of copies of the
Software Tools, Documentation and other Sony Materials and provide such number
of units of the Hardware Tools as Developer may reasonably request, subject to
availability, during the term of this Agreement. The amount to be paid by
Developer for each such copy and/or unit shall be set forth in the Tool Catalog
or other documentation provided by SCEA, and shall include an up-front lease
payment for the Hardware Tools, a license fee for Software Tools and
Documentation, which Software Tools and Documentation may be provided at the
time of payment or thereafter, and additional license fees for use of Technical
Support and Sony Materials (collectively, the "Tool Payment"). The Tool Payment
for Development Tools may be changed by SCEA from time to time in connection
with the order of additional Development Tools without notice to Developer. Any
Tool Payments are exclusive of any withholding taxes or other assessments which
may be imposed by any governmental authority or any other U.S. or foreign
federal, state or local sales or value-added tax, use or excise tax, customs
duties or other similar taxes or duties, which SCEA may be required to collect
or pay. Developer shall be solely responsible for the payment or reimbursement
of any such taxes, fees and other such charges or assessments applicable to the
payment by Developer of any such Tool Payment. In addition, Developer shall pay
or reimburse SCEA for all personal property taxes or similar charges, however
imposed, on the lease, license, use and possession of the Development Tools
during the term of this Agreement. All Tool Payments must be paid in full prior
to shipment of any Development Tools. If permitted by SCEA, SCEA may at its sole
discretion extend credit terms and limits to Developer. SCEA may also at any
time revoke such credit terms and limits as extended. If Developer qualifies for
such credit terms, then orders will be invoiced upon shipment and each invoice
will be paid within thirty (30) days of the date of the invoice. All overdue
sums owed or otherwise payable to SCEA under this Section 3 hereto shall bear
interest at the rate of one
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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. Developer shall be additionally liable for all
of SCEA's costs and expenses of collection, including, without limitation,
reasonable fees for attorneys and court costs.
3.2 DELIVERY. Within a reasonable time after receipt of the applicable
Tool Payment and subject to availability, SCEA shall deliver the Development
Tools and any other Sony Materials to Developer at Developer's principal place
of business or at a separate Development Site notified to SCEA in writing.
Developer shall bear all transport costs, including but not limited to, any
insurance costs, related thereto and risk of loss or damage in transit to any
and all of the Development Tools shall vest in Developer immediately upon
delivery to the carrier.
4. LIMITATIONS ON LICENSES; RESERVATION OF RIGHTS.
4.1 REVERSE ENGINEERING PROHIBITED. Developer hereby agrees not to
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 (whether or not all or any portion of the Sony Materials are
integrated with the Licensed Developer Software), or permit or encourage any
third party to do so. Developer 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 Agreement. The burden of proof under this Section shall be on Developer,
and SCEA reserves the right to require Developer to furnish evidence
satisfactory to SCEA that this Section has been complied with.
4.2 RESERVATION OF SCEA'S RIGHTS. The licenses granted in this Agreement
extend only to development and/or testing of Executable Software (or portions
thereof) and/or Licensed Products for use on the Player, in such format as may
be designated by SCEA. Without limiting the generality of the foregoing and
except as otherwise provided herein or in a separate written agreement,
Developer shall not have the right to publish, manufacture, market, promote,
distribute, sell or transmit the Executable Software or the Licensed Products in
any manner (to the extent each includes Sony Materials), including, but not
limited to, 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 Agreement does not grant any
right or license, under any Intellectual Property Rights of SCEA 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. Developer shall not make use of any of the Development
Tools, other Sony Materials and/or any Intellectual Property Rights or Licensed
Trademarks thereto (or any portion thereof) except as authorized by and in
compliance with the provisions of this Agreement or as may be otherwise
expressly authorized in writing by SCEA. No right or license is granted herein
or elsewhere for the development of Licensed Products to be sold outside of the
School Market, or for the actual distribution and/or sale of Licensed Products
through wholesale or retail channels of distribution or any other means of
distribution other than distribution directly by Developer itself to the School
Market. No right, license or privilege has been granted to Developer 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 DEVELOPER'S RIGHTS. Separate and apart from Sony
Materials licensed to Developer hereunder, Developer (or a Licensed Publisher,
as determined between Developer and such Licensed Publisher) retains all rights,
title and interest in and to the Licensed Developer Software, including without
limitation, Developer's (or Licensed Publisher's) Intellectual Property Rights
therein, as well as all of Developer's (or Licensed Publisher's) rights in any
source code and other underlying material such as artwork and music related
thereto, created by Developer (or Licensed Publisher) and contained therein, and
nothing in this Agreement shall be construed to restrict the right of Developer
to develop products incorporating the Licensed Developer Software and such
underlying material (separate and apart from the Sony Materials) for any
hardware platform or service other than the Player.
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 Developer. SCEA shall also have the right to
delete, and intends to delete any country or countries from the Licensed
Territory if, in SCEA's reasonable judgment, the laws or enforcement of such
laws in such country or countries do not protect SCEA's Intellectual Property
Rights. In the event a country is deleted from the Licensed Territory, SCEA
shall deliver to Developer a notice stating the number of days within which
Developer shall cease exercising such licenses in the deleted country or
countries, including but not limited to retrieving Development Tools from any
such country. Developer 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.
4.5 PROHIBITION ON EXPORT. Developer shall not export, directly or
indirectly, any Development Tools outside of the Licensed Territory. In
addition, Developer certifies that it shall not export, directly or indirectly,
any Development Tools in violation of U.S. law and regulations. If for any
reason SCEA in writing permits Developer to export Development Tools outside of
the Licensed Territory, Developer shall be exporter of record
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and shall be solely responsible for the obtaining of the compliance with any
required export licenses. Developer certifies that the Development Tools will
not be resold or delivered, directly or indirectly, to entities located in
destinations where SCEA's Intellectual Property Rights will not be protected, as
provided in Section 4.4 above, or to destinations prohibited under U.S. laws and
regulations or resold or delivered, directly or indirectly, to nationals or
residents from those destinations. The prohibited destinations and nationals
include: (i) Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria or any other
countries that are subsequently declared prohibited destinations under such laws
or regulations; (ii) anyone on the U.S. Commerce Department's Table of Denial
Orders or U.S. Treasury Department's list of Specially Designated Nationals; or
(iii) otherwise in violation of any restrictions, laws or regulations of any
United States or foreign agency or authority. Prohibited sales may subject
Developer to fines and imprisonment under applicable U.S. law. Violation of this
certification will result in the termination for cause of this Agreement and all
licenses granted hereunder from SCEA to Developer, as set forth in Section 14.2
hereto. In addition, Developer shall, at its own expense, obtain and arrange for
the maintenance in full force and effect of all governmental approvals,
consents, licenses, authorizations, declarations, filings and registrations as
may be necessary or advisable for performance of all of the terms and conditions
of this Agreement, including, but not limited to, foreign exchange approvals,
import and offer agent licenses, fair trade approvals and all approvals which
may be required to realize the purposes of this Agreement. Developer agrees to
the foregoing and warrants that it is not located in, under the control of, or a
national or a resident of any such prohibited country or on any such prohibited
party list.
5. QUALITY STANDARDS FOR THE LICENSED PRODUCTS.
5.1 QUALITY ASSURANCE GENERALLY. The Licensed Products, including,
without limitation, the contents and title of each of the Licensed Products,
and/or Developer's use of any of the Licensed Trademarks, shall be subject to
SCEA's prior written approval at its sole discretion
5.2 DEVELOPER'S ADDITIONAL QUALITY ASSURANCE OBLIGATIONS. If at any time
or times subsequent to SCEA's approval of the Executable Software as
contemplated by the Licensed Publisher Agreement to be signed by Licensed
Publishers, SCEA identifies any material bugs (such materiality to be determined
by SCEA in its sole discretion) with respect to the Licensed Product (or
portions thereto) or any material bugs are brought to the attention of SCEA or
in the event that SCEA identifies any improper use of its Licensed Trademarks or
other Sony Materials with respect to the Licensed Product or any such improper
use is brought to the attention of SCEA, Developer shall, at no cost to SCEA,
promptly correct any such material bugs, or improper Licensed Trademark or Sony
Material use, 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 any of the Licensed Products create any
reasonable risk of loss or damage to any property or injury to any person,
Developer shall immediately take effective steps or cooperate with the
appropriate Licensed Publisher or Licensed Developer to take effective steps, at
Developer's and/or Licensed Publisher's or Licensed Developer's sole liability
and expense, to recall and/or to remove such defective Licensed Product from any
affected channels of distribution.
6. TITLE TO DEVELOPMENT TOOLS.
Subject to the rights granted by SCEA to Developer hereunder, all rights with
respect to the Development Tools, including, without limitation, all of SCEA's
Intellectual Property Rights therein, are and shall be the exclusive property of
SCEA. Nothing herein shall give Developer any right, title or interest in or to
the Development Tools (or any portion thereof), or any Intellectual Property
Rights therein other than the right to use the Development Tools for the
development of the Executable Software solely in accordance with the provisions
of this Agreement. Developer 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 and/or
interests in or to the Development Tools (or any portion thereof).
7. USAGE.
7.1 LOCATION AND ACCESS. Developer agrees to use and store the Sony
Materials (including but not limited to the Development Tools in each instance
used in this Section hereunder) at its principal place of business as set forth
in Exhibit A hereto and such other places within the Licensed Territory of which
Developer has notified SCEA in writing and which Developer may use as
development sites (collectively, the "Development Sites"), and Developer shall
insure that such Sony Materials are accessible only to those employees and
subcontractors entitled to use such Sony Materials. Developer agrees to restrict
access to the Sony Materials so that only those employees and subcontractors
entitled to access to such Sony Materials pursuant to the terms of the
Nondisclosure Agreement may see or use the Sony Materials. In the event that
Developer wishes to change the Development Site, it shall obtain SCEA's prior
written approval thereto in a form substantially similar to Exhibit B hereto.
Developer shall affix to and maintain on the Hardware Tools, in a conspicuous
location, a notice stating that certain elements of such hardware are owned by
SCEA. In addition, Developer must preserve any other proprietary rights notices
placed on the Sony Materials by SCEA and must place all such notices on any
copies made as permitted by the terns hereof. Developer shall not transfer
Development Tools to another Licensed Developer without SCEA's prior written
approval, which shall not be unreasonably withheld and which shall be in the
form substantially similar to Exhibit B hereto. Notwithstanding any other
provisions of this Agreement, Developer shall not, directly or indirectly,
provide any Development Tools to any person or entity outside of the Licensed
Territory. Developer further agrees
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that it shall not, directly or indirectly, provide any Development Tools to any
person or entity in any situation where Developer should know that such
Development Tools will be exported outside of the Licensed Territory, pursuant
to Section 4.6 of this Agreement. In the event that Developer desires to
contract to develop Licensed Products with a Licensed Publisher or Licensed
Developer outside of the Licensed Territory, Developer shall consult with SCEA
and Affiliates of SCEA prior to contracting with any such Licensed Publisher or
Licensed Developer. It shall be considered a material breach of this Agreement
for Developer to send Development Tools to a location that has not been
authorized by SCEA or outside of the Licensed Territory.
7.2 DEVELOPER DESIGNEE. Developer agrees that the individual named in
Exhibit A hereto shall act as the designated caretaker of the Sony Materials
(the "Developer Designee"). The Developer Designee shall be responsible for
receiving all Sony Materials, overseeing that the terms of this Section 7 are
fulfilled and shall act as Developer's contact for matters related to the Sony
Materials. In the event that Developer wishes to appoint a new Developer
Designee, it shall give SCEA written notice ten (10) days prior to the change.
7.3 COPIES. Developer agrees that it shall not make, nor allow anyone
else to make, a copy of any Software Tools or Documentation; provided, however,
that Developer may, without payment of any additional license fee, make one (1)
copy of each set of Software Tools and Documentation licensed from SCEA for
backup purposes only and if Software Tools and Documentation are provided via
electronic media or means to Developer, Developer may make one (1) copy for each
set of Hardware Tools which Developer possesses. In addition, if SCEA chooses to
provide, or permits Developer to obtain, any Software Tools or Documentation via
electronic media, Developer may copy such Software Tools and/or Documentation
from the electronic media subject to any payment of the applicable fees for each
such copy. Any copies permitted pursuant to the terms of this Section 7.3 shall
be used pursuant to the terms and conditions hereof.
7.4 VERIFICATION OF COMPLIANCE; INVENTORY REPORTS AND INSPECTIONS.
Developer shall prepare and provide SCEA with an inventory report of Development
Tools within thirty (30) days of each anniversary date of this Agreement,
detailing each Development Tool by serial number and current physical location.
Developer agrees that authorized SCEA representatives may at any time or times
inspect each Development Site, the Development Tools and copies of other Sony
Materials and/or Confidential Information during Developer's normal business
hours in order to verify that Developer is complying with its obligations under
this Agreement.
7.5 CARE. Developer undertakes, at all times to: (i) take all reasonable
and proper care of the Hardware Tools; (ii) keep the Hardware Tools in good and
serviceable condition; (iii) ensure the full compliance with all instructions
relating to the maintenance, security or operation of the Hardware Tools; (iv)
maintain and service with all due care the Hardware Tools at its expense in
accordance with any reasonable written instructions given by SCEA; (v) take all
such further steps as are necessary to ensure that the Hardware Tools are safe
and constituting no risk to the health or safety of any person or property; (vi)
inform SCEA immediately of any failure or breakdown in the Hardware Tools
howsoever caused. All risk of loss of the Hardware Tools, including without
limitation due to theft, shall be borne by Developer. In the event that the
Development Tools or any portion thereof is lost, stolen or missing, Developer
shall immediately notify SCEA; and if Developer later finds such Development
Tools in the possession of a third party, Developer shall make every effort
within its power to recover such Development Tools and/or to prevent further
loss of such Development Tools. Developer hereby appoints SCEA as its
attorney-in-fact to conduct or assist in the recovery of any lost, stolen or
missing Development Tools.
7.6 LIMITATION ON USE. In developing and/or testing the Executable
Software (or portions thereof), Developer shall fully comply in all respects
with any and all technical specifications which may from time to time be issued
by SCEA or forwarded by Licensed Publishers or other Licensed Developers to
Developer at the instruction of SCEA. For purposes of this Agreement, such
technical specifications, whenever issued, shall be deemed to be Documentation.
Developer shall not develop or attempt to develop Executable Software other than
by the use of (a) the Development Tools and/or those third party tools
preauthorized by SCEA in writing on SCEA's bulletin board system (BBS) from time
to time, (b) general purpose software packages (such as Deluxe Paint, Photoshop
and the like), (c) tools created by the Developer itself without violating any
provision of this or any other agreement with SCEA and/or (d) tools or utilities
created by other Licensed Developers or third parties provided that Developer
has obtained a license for such use and has advised SCEA in writing of each such
tool or utility. Developer shall not use any of the above tools and/or software
packages in a manner which would violate any provision of this or any other
agreement with SCEA. Developer shall not transfer any tools created by Developer
containing Sony Materials without the express written consent of SCEA.
8. REPAIRS AND ENHANCEMENTS.
8.1 NOTIFICATION OF DEFECTS. Developer will notify SCEA of any material
errors, bugs or defects that Developer uncovers in the Development Tools, and in
the event that within the first six (6) months of delivery of such Development
Tools to Developer, such Development Tools are found to have such material
errors, bugs or defects (not due to the negligence or fault of Developer), then
SCEA shall make such efforts as SCEA in its discretion deems reasonable to fix
such errors, bugs or defects in such Development Tools.
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8.2 ENHANCEMENTS. During the term of this Agreement, SCEA will notify
Developer if and when (i) any revised or updated version of the Software Tools
or Documentation are generally released to SCEA's Developers and the terms of
the license therefor, and Developer may license from SCEA such revisions or
updates on such terms, and (ii) any updated, modified or enhanced version or
component for the Hardware Tools are generally released to SCEA's Developers,
and the terms of delivery therefor, and Developer shall be entitled to obtain
from SCEA such update, modification, enhancement or component on such terms.
9. REPRESENTATIONS AND WARRANTIES.
9.1 REPRESENTATIONS AND WARRANTIES OF SCEA. SCEA represents and warrants
solely for the benefit of Developer 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 DEVELOPER. Developer represents
and warrants that:
(i) There is no threatened or pending action, suit, claim or proceeding
alleging that the use by Developer of all or any part of the Licensed Developer
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 Developer in or to the Licensed Developer
Software or any underlying work or content embodied therein, or any name,
designation or trademark used in conjunction with the Executable Software and/or
Licensed Products;
(ii) The Licensed Developer Software and its contemplated use under this
Agreement does not and shall not infringe any person's or entity's rights
including without limitation, patents, copyrights including rights in a joint
work, trademarks, trade dress, trade secret, rights of publicity, privacy,
performance, moral rights, literary rights and any other third party right;
(iii) Developer has the right, power and authority to enter into this
Agreement and to fully perform its obligations hereunder;
(iv) The making of this Agreement by Developer does not violate any
separate agreement, rights or obligations existing between Developer and any
other person or entity, and, throughout the term of this Agreement, Developer
shall not make any separate agreement with any person or entity that is
inconsistent with any of the provisions of this Agreement;
(v) Developer has not sold, assigned, leased, licensed or in any other
way disposed of or encumbered the rights granted to Developer hereunder,
including but not limited to the license to use the Development Tools in
accordance with the terms and conditions set forth herein, and Developer will
not sell, assign, lease, license or in any other way dispose of or encumber any
of such rights;
(vi) Developer 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 Executable Software and/or Licensed Products are connected in any way
with SCEA (other than that the Executable Software and/or Licensed Products have
been developed under license from SCEA);
(vii) In the event that Executable Software is delivered to Licensed
Publishers or other Licensed Developers by Developer in source code form, all
precautions must be taken by Developer to ensure the confidentiality of such
source code;
(viii) The Executable Software delivered to SCEA shall be in a
commercially acceptable form, free of significant bugs, defects, time bombs or
viruses, such that use of the software or Player would be disrupted, delayed,
destroyed or rendered less than fully useful, and shall be fully compatible with
the Player and any peripherals listed on the Licensed Product as compatible with
the Licensed Product;
(ix) All of the Licensed Products and/or Executable Software
incorporated therein shall be developed by or at the direction of Developer 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 and will not contain any obscene or defamatory matter;
(x) Developer's policies and practices with respect to the development
and/or testing of the Licensed Products (or portions thereof) and/or Executable
Software incorporated therein shall in no manner reflect adversely upon the
name, reputation or goodwill of SCEA;
(xi) Developer has the technical expertise and resources to fulfill its
obligations under this Agreement; and
(xii) Developer shall make no false, misleading or inconsistent
representations or claims with respect to any Licensed Products, the Player or
SCEA.
10. INDEMNITIES; LIMITED LIABILITY.
10.1 INDEMNIFICATION BY SCEA. SCEA shall indemnify and hold Developer
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 representations or warranties provided by
SCEA herein; provided, however, that
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Developer 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/or settlement thereof, subject to the right of
Developer to participate in any such action or proceeding at its own expense
with counsel of its own choosing. 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. Developer agrees to provide SCEA, at no expense to Developer, reasonable
assistance and cooperation concerning any such matter; and Developer shall not
agree to the settlement of any such claim, action or proceeding without SCEA's
prior written consent.
10.2 INDEMNIFICATION BY DEVELOPER. Developer 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 of any of the representations or warranties
provided by Developer herein, including without limitation claims resulting from
Developer's failure to timely pay any withholding taxes or other assessments as
set forth in Section 3.1 hereto or any breach of Developer's confidentiality
obligations as set forth in Section 13 hereto; or (ii) any claim of infringement
or alleged infringement of any third party's Intellectual Property Rights with
respect to the Licensed Developer Software; or (iii) any claims of or in
connection with any personal or bodily injury (including death) or property
damage, by whomsoever such claim is made, arising out of, in whole or in part,
the development and/or testing of the Licensed Products (or portions thereof) or
any use of any of the Development Tools hereunder, 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; provided, however, that SCEA
shall give prompt written notice to Developer of the assertion of any such
claim, and provided, further, that Developer shall have the right to select
counsel and control the defense and/or settlement thereof, subject to the right
of SCEA to participate in any such action or proceeding at its own expense with
counsel of its own choosing. Developer 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 Developer. SCEA shall retain the right to approve any settlement.
SCEA shall provide Developer, 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 without Developer's prior
written consent. If in the reasonable judgment of SCEA, Developer is financially
unable to conduct a reasonable defense of any such action, then SCEA may
undertake complete control of such action upon notice to Developer, while
reserving SCEA's right to obtain full restitution of all of its fees and costs,
including reasonable attorneys' fees and experts' fees, under this Section from
Developer
10.3 LIMITATION OF LIABILITY.
10.3.1 LIMITATION OF SCEA'S LIABILITY. IN NO EVENT SHALL SCEA OR ITS
AFFILIATES OR OTHER COMPANIES AFFILIATED WITH SCEA AND ITS AFFILIATES,
SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE FOR PROSPECTIVE
PROFITS, OR ANY SPECIAL, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE
BREACH OF THIS AGREEMENT BY SCEA, THE USE OF THE LICENSED PRODUCTS AND/OR
EXECUTABLE SOFTWARE INCORPORATED THEREIN BY DEVELOPER, ANY LICENSED DEVELOPER,
ANY LICENSED PUBLISHER OR ANY END USERS AND/OR THE USE OF OR INABILITY TO USE
THE DEVELOPMENT TOOLS BY DEVELOPER, WHETHER UNDER THEORY OF CONTRACT, TORT
(INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR OTHERWISE. SCEA SHALL
NOT BE LIABLE FOR ANY INJURY, LOSS OR DAMAGE, DIRECT OR CONSEQUENTIAL, ARISING
OUT OF THE USE OR INABILITY TO USE THE DEVELOPMENT TOOLS. IN NO EVENT SHALL
SCEA'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 10.1 HERETO, EXCEED THE TOTAL AMOUNT PAID
BY DEVELOPER TO SCEA UNDER THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
NEITHER SCEA 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 DEVELOPER OR TO ANY THIRD PARTIES WITH RESPECT TO THE
QUALITY, OPERATION AND/OR PERFORMANCE OF ANY PORTION OF THE SONY MATERIALS, THE
PLAYER, ANY LICENSED PRODUCT, ANY OF THE DEVELOPMENT TOOLS OR ANY PORTION
THEREOF.
10.3.2 LIMITATION OF DEVELOPER'S LIABILITY. IN NO EVENT SHALL DEVELOPER
OR COMPANIES AFFILIATED WITH DEVELOPER, SUPPLIERS, OFFICERS, DIRECTORS,
EMPLOYEES OR AGENTS BE LIABLE TO SCEA FOR ANY PROSPECTIVE PROFITS, OR SPECIAL,
PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH (i) THIS AGREEMENT, (ii) THE USE IN ACCORDANCE WITH THE TERMS AND
CONDITIONS OF THIS AGREEMENT OF THE DEVELOPMENT TOOLS, OR (iii) THE USE OR
DISTRIBUTION IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT OF
ANY CODE PROVIDED BY SCEA, IN WHOLE OR
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IN PART, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),
INDEMNITY, PRODUCT LIABILITY OR OTHERWISE, PROVIDED THAT DEVELOPER EXPRESSLY
AGREES THAT SUCH LIMITATIONS SHALL NOT APPLY TO DAMAGES RESULTING FROM
DEVELOPER'S BREACH OF SECTIONS 2, 4, 6, 10.2, 11.2 OR 13 OF THIS AGREEMENT, AND
PROVIDED FURTHER THAT SUCH LIMITATIONS SHALL NOT APPLY TO AMOUNTS WHICH
DEVELOPER MAY BE REQUIRED TO PAY TO THIRD PARTIES UNDER SECTIONS 10.2 OR 16.9.
10.4 DISCLAIMER OF WARRANTIES. NEITHER SCEA NOR ITS AFFILIATES AND
SUPPLIERS MAKE, NOR DOES DEVELOPER RECEIVE, ANY WARRANTIES, EXPRESS, IMPLIED OR
STATUTORY REGARDING THE SONY MATERIALS, THE PLAYER OR THE DEVELOPMENT TOOLS
PROVIDED HEREUNDER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SCEA 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, THE PLAYER OR THE
DEVELOPMENT TOOLS. 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.
11. COPYRIGHT, TRADEMARK AND TRADE SECRET RIGHTS.
11.1 DEVELOPER RIGHTS. The Licensed Developer Software and Product
Proposals related thereto (exclusive of the rights licensed from SCEA hereunder)
and the Intellectual Property Rights therein and any names or other designations
used as titles for the Licensed Products and any other trademarks used by
Developer and/or its affiliates are and shall be the exclusive property of
Developer or of any third party from which Developer has been granted, or to
whom Developer has granted, the license and related rights to develop and
otherwise exploit any such Licensed Developer Software and related materials or
any such names or other designations. 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
Developer's rights, title and/or interests in or to Developer's Intellectual
Property Rights.
11.2 SCEA RIGHTS.
11.2.1 LICENSED TRADEMARKS. 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 Developer any right, title and/or
interest in or to any of the Licensed Trademarks. Developer shall not use the
Licensed Trademarks without the permission of SCEA, other than, upon execution
of this Agreement and subject to Section 13.2.2 hereto, to state that Developer
is a "Licensed PlayStation Developer". Developer 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 and/or interests in or to any of the Licensed Trademarks,
nor shall Developer register any trademark in its own name or in the name of any
other person or entity, or obtain rights to employ Internet domain names or
addresses, which are similar to or are likely to be confused with any of the
Licensed Trademarks.
11.2.2 LICENSE OF SONY MATERIALS AND PLAYER. All rights with
respect to the Sony Materials and Player, including, without limitation, all of
SCEA's Intellectual Property Rights therein, are and shall be the exclusive
property of SCEA or Affiliates of SCEA. Nothing herein shall give Developer any
right, title or interest in or to the Sony Materials or the Player (or any
portion thereof), other than the non-exclusive license during the tern hereof to
use the Sony Materials and Player for the development and/or testing of the
Executable Software (or portions thereof) solely in accordance with the
provisions of this Agreement. Developer 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
and/or interests in or to the Sony Materials or the Player (or any portion
thereof).
12. INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS BY THIRD PARTIES.
In the event that either Developer or SCEA discovers or otherwise becomes aware
that any of the Intellectual Property Rights of the other 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.
SCEA shall have the sole right, in its discretion, to institute and prosecute
lawsuits against Third Parties for such infringement of SCEA's Intellectual
Property Rights. Developer shall have the right, in its discretion, to institute
and prosecute lawsuits against third persons for such infringement of
Developer's Intellectual Property Rights which are distinct from SCEA's
Intellectual Property Rights. If Developer does not institute an infringement
suit within thirty (30) days after SCEA's written request that it do so, SCEA
may institute and prosecute such lawsuit. Any lawsuit shall be prosecuted solely
at the cost and expense of the party bringing suit and all sums recovered in any
such lawsuits, whether by judgment, settlement or otherwise, in excess of the
amount of reasonable attorneys' fees and other out of pocket expenses of such
suit, shall belong solely to the party bringing the suit. Upon request of the
party bringing the lawsuit, the other party shall execute all papers, testify on
all matters and otherwise cooperate in every way necessary and desirable for the
prosecution of any such lawsuit. The party bringing suit shall reimburse the
other party for the reasonable expenses incurred as a result of such
cooperation, but, unless authorized by other provisions of this Agreement, not
costs and expenses attributable to the conduct of a cross-claim or third party
action.
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13. CONFIDENTIALITY.
13.1 PRIOR NONDISCLOSURE AGREEMENT. Developer hereby reaffirms and
ratifies the Nondisclosure Agreement dated September 28, 1995 between SCEA and
Developer {"Nondisclosure Agreement") which, as amended by Section 13.2 below,
will remain in full force and effect with respect to the Confidential
Information of SCEA throughout the term of this Agreement.
13.2 ADDITIONAL REQUIREMENTS REGARDING CONFIDENTIAL INFORMATION OF SCEA.
13.2.1 CONFIDENTIAL INFORMATION OF SCEA. "Confidential
Information" of SCEA (as defined in the Nondisclosure Agreement and amended
hereby) shall also include (i) the Sony Materials and information regarding
SCEA'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), (iii) any and all other information, of whatever type and in
whatever medium (including without limitation all data, ideas, discoveries,
developments, knowhow, trade secrets, inventions, creations and improvements),
that is disclosed in writing or in any other form by SCEA to Developer, and (iv)
this Agreement and the terms and conditions thereof. If at any time Developer
becomes aware of any unauthorized duplication, access, use, possession or
knowledge of any Confidential Information of SCEA, it shall notify SCEA as soon
as reasonably practicable, and shall promptly act to recover any such
information and/or prevent further breach of the confidentiality obligations
herein. Developer shall take all reasonable steps requested by SCEA to prevent
the recurrence of any unauthorized duplication, access, use, possession or
knowledge of the Confidential Information of SCEA.
13.2.2 CONFIDENTIALITY OF AGREEMENT. As provided above, the
terms and conditions of this Agreement shall be treated as Confidential
Information of SCEA; 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; and (iii) in
confidence, in connection with the enforcement of this Agreement or rights under
this Agreement; and (iv) if Developer shall be required, in the opinion of
counsel, to file publicly or otherwise disclose the terms of this Agreement
under applicable federal and/or state securities laws, Developer shall be
required to promptly notify SCEA such that SCEA has a reasonable opportunity to
contest or limit the scope of such required disclosure, end Developer shall
request, and shall use its best efforts to obtain, confidential treatment for
such sections of this Agreement as SCEA may designate. Any failure to notify
SCEA under clause (iv) of this Section 13.2.2 shall be deemed a material breach
of this Agreement. Unless otherwise permitted by SCEA, both parties shall treat
the fact that they have entered into this Agreement as Confidential Information
of the other party until a public announcement regarding the execution of this
Agreement is released by SCEA, at its sole discretion, announcing that Developer
has become a licensee of SCEA.
13.3 REQUIREMENTS REGARDING CONFIDENTIAL INFORMATION OF DEVELOPER.
13.3.1 CONFIDENTIAL INFORMATION OF DEVELOPER. "Confidential
Information of Developer" shall mean (i) the Licensed Developer Software as
provided to SCEA pursuant to this Agreement and all documentation and
information relating thereto, including Product Proposals (other than
documentation and information expressly intended for use by and release to end
users, the general public or the trade), and (ii) information relating to
Developer's or its affiliates' or licensors' finances, business, marketing and
technical plans, that is disclosed in writing or in any other form by Developer
to SCEA.
13.3.2 PRESERVATION OF CONFIDENTIAL INFORMATION OF DEVELOPER.
SCEA shall hold all Confidential Information of Developer in confidence, and
shall take all reasonable steps necessary to preserve the confidentiality of the
Confidential Information of Developer, 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 SCEA takes to protect the confidentiality of its own most highly
confidential information. Except as may be expressly authorized by Developer in
writing, SCEA shall not at any time, either before or after any termination of
this Agreement, directly or indirectly: (i) disclose any 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; (ii) except as
otherwise provided in this Agreement, duplicate the Confidential Information of
Developer for any purpose whatsoever; (iii) use the Confidential Information for
any reason or purpose other than as expressly permitted in this 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 of
Developer.
133.3 OBLIGATIONS UPON UNAUTHORIZED DISCLOSURE. If at any time
SCEA becomes aware of any unauthorized duplication, access, use, possession or
knowledge of any Confidential Information of Developer, it shall notify
Developer as soon as is reasonably practicable. SCEA shall provide any and all
reasonable assistance to Developer to protect Developer's proprietary rights in
any Confidential Information of Developer 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
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prosecution in good faith (alone or with the disclosing party) of legal action,
and reimbursement for all reasonable attorneys' fees, costs and expenses
incurred by Developer to protect its proprietary rights in the Confidential
Information of Developer. SCEA shall take all reasonable steps requested by
Developer to prevent the recurrence of any unauthorized duplication, access,
use, possession or knowledge of the Confidential Information of Developer.
13.3.4 EXCEPTIONS. The foregoing restrictions will not apply to
information that could be deemed to be Confidential Information of Developer to
the extent that such information: (i) was known to SCEA at the time of
disclosure to it; (ii) becomes part of information in the public domain through
no fault of SCEA; (iii) has been rightfully received from a third party
authorized by Developer to make such disclosure without restriction; (iv) has
been approved for release by prior written authorization of Developer; 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 SCEA has notified the disclosing party
immediately upon learning of the possibility of any such court order or legal
requirement and has given Developer a reasonable opportunity to contest or limit
the scope of such required disclosure.
14. TERM AND TERMINATION.
14.1 EFFECTIVE DATE; TERM. This 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 term of
this Agreement shall be for four (4) years from the Effective Date. Any Licensed
Products being developed by Developer which have been previously approved by
SCEA or otherwise qualified to proceed with development under the Original
Developer Agreement or Original Developer License Agreements shall, upon full
execution of this LDA by Developer and SCEA, be considered Licensed Products
under this LDA, and the terms and conditions of this LDA shall apply to such
Licensed Products as if they were licensed hereunder.
14.2 TERMINATION BY SCEA. SCEA shall have the right to terminate this
Agreement immediately, by providing written notice of such election to
Developer, upon the occurrence of any of the following events or circumstances:
(i) If Developer breaches (A) any of its material obligations provided
for in this Agreement (including but not limited to Developer's failure to pay
any amounts due hereunder), which materiality shall be determined by SCEA in its
sole discretion; (B) some of its obligations provided for in this Agreement, the
combined effect of which has a material effect hereunder; or (C) any other
agreement entered into between SCEA or Affiliates of SCEA and Developer. In the
event of each such breach, Developer shall have an opportunity to correct or
cure such breach within thirty (30) days after receipt of written notice of such
breach by SCEA, provided that, if after such thirty (30) day period, such breach
is not corrected or cured to SCEA's satisfaction, this Agreement shall be
terminated.
(ii) If, in SCEA's reasonable judgment, the laws or enforcement of the
laws of the country or countries in which the Developer or Developer's sole
Development Site is located do not protect SCEA's Intellectual Property Rights.
(iii) Developer's statement that it is unable to pay any amount due
hereunder, or is unable to pay its debts generally as they shall become due.
(iv) Developer'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 Developer's
property, whether tangible or intangible, wherever located.
(v) The making by Developer of a general assignment for the benefit of
creditors.
(vi) The commencing by Developer or Developer's intention to commence a
voluntary case under any applicable bankruptcy laws (as now or hereafter may be
in effect).
(vii) Developer is bankrupt or insolvent.
(viii) The filing by Developer or the intent to file by Developer of a
petition seeking to take advantage of any other law providing for the relief of
debtors.
(ix) Developer'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.
(x) The liquidation or dissolution of Developer, or a statement of
intent by Developer to no longer exercise any of the rights granted by SCEA to
Developer hereunder.
(xi) If during the term of this Agreement a controlling interest in
Developer or a controlling interest in an entity which has, directly or
indirectly, a controlling interest in Developer is transferred to a party that
(A) is in breach of any agreement with SCEA or an Affiliate of SCEA, and such
agreement has been terminated as a result of such breach; (B) directly or
indirectly holds or acquires an interest in a third party which develops any
interactive hardware device or product (excluding a Windows/Intel-based personal
computer or Mac) which is directly or indirectly competitive with the Player;
(C) is in litigation with SCEA or Affiliates of SCEA concerning any proprietary
technology, trade secrets or other Intellectual Property Rights or Confidential
Information of SCEA. As used in this Section 14.2, "controlling interest" means,
with respect to any form of entity, sufficient power, whether by holding shares
of stock, management power, voting power
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or power conferred on such person by the Certificate of Incorporation, Bylaws,
Partnership Agreement or other documents regulating the form and powers of such
entity, to control the decisions of such entity.
(xii) If during the term of this Agreement Developer, or an entity that
has, directly or indirectly, a controlling interest in Developer, enters into a
business relationship with a third party with whom Developer materially
contributes to develop core components to an interactive hardware device or
product (excluding a Windows/Intel-based personal computer or Mac) which is
directly or indirectly competitive with the Player.
Developer shall be obligated to immediately notify SCEA in the event that any of
the events or circumstances specified in subsections (ii) - (xii) occur, and any
failure to so notify SCEA shall constitute a material breach with no opportunity
to cure such breach.
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 to Developer in the event that Developer fails to notify
SCEA promptly in writing of any material change to any materials previously
approved by SCEA in accordance with Section 5 hereto, and such breach is not
corrected or cured prior to the earlier of (i) thirty (30) days after receipt of
written notice of such breach or (ii) commercial release of the product.
14.4 OPTION OF SCEA IN LIEU OF TERMINATION. As an alternative 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, require Developer to pay
liquidated damages of up to Ten Thousand Dollars ($10,000) per incident (as
defined in the sole discretion of SCEA) for the following material breaches of
Developer: providing Development Tools, Sony Materials or Confidential
Information of SCEA to an unlicensed developer or other third party; improper
use of any Licensed Trademarks; and failure to provide SCEA with inventory
reports in accordance with Section 7.4 or to otherwise account for the
whereabouts of Development Tools. Such liquidated damages shall be required in
SCEA's sole discretion depending on the circumstances, including the extent and
type of injury flowing from the breach, and SCEA's expectations for future
performance of Developer. In the event that SCEA selects this option, Developer
shall be entitled to terminate this Agreement upon written notice to SCEA rather
than paying the liquidated damages hereunder. Election of this option by SCEA
shall not constitute a waiver of any of SCEA's rights under this Agreement with
respect to any other incidents and SCEA shall have the right to terminate this
Agreement with respect to any other material breach.
14.5 PAYMENTS NONREFUNDABLE. In the event of the termination of this
Agreement in accordance with any of the provisions of Sections 14.2 through
14.4, above, no portion of any payments of any kind whatsoever previously
provided to SCEA hereunder shall be owed or be repayable to Developer.
15. EFFECT OF EXPIRATION OR TERMINATION.
15.1 REVERSION OF RIGHTS. Upon expiration or termination, all rights
herein granted by SCEA to Developer shall immediately revert to SCEA, and
Developer shall cease and desist from any further use of the Development Tools,
Confidential Information, other Sony Materials, Licensed Trademarks and any
Intellectual Property Rights therein, and Developer shall have no further right
to continue the development and/or testing of any Executable Software.
15.2 RETURN OF DEVELOPMENT TOOLS. Upon the expiration or earlier
termination of this Agreement, Developer shall immediately deliver to SCEA, or
if and to the extent requested by SCEA destroy, all Development Tools, other
Sony Materials and any and all copies thereof. Within five (5) working days
after any such destruction, Developer shall provide SCEA with an itemized
statement certified to be accurate by an officer of Developer, indicating the
number of copies and/or units of the Development Tools and other Sony Materials
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
Developer fails to return the Development Tools and SCEA must resort to legal
means (including without limitation any use of attorneys) to recover the
Development Tools or the replacement value thereof, all costs, including SCEA's
reasonable attorneys' fees, shall be borne by Developer, and SCEA may, in
addition to SCEA's other remedies, withhold such amounts from any payment
otherwise due from SCEA to Developer.
15.3 RETURN OF CONFIDENTIAL INFORMATION. Upon the expiration or earlier
termination of this Agreement, Developer and SCEA shall 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, 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 Agreement.
15.4 RENEWAL OR EXTENSION OF THIS AGREEMENT; TERMINATION WITHOUT
PREJUDICE. SCEA shall be under no obligation to renew or extend this Agreement
notwithstanding any actions taken by either of the parties prior to the
expiration of this Agreement. Upon the expiration of this Agreement, neither
party shall be liable to the other for any damages (whether direct,
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
CONFIDENTIAL
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expiration of this Agreement shall not excuse either party from its previous
breach of any of the provisions of this Agreement or from any obligations
surviving the expiration of this Agreement, and full legal and equitable
remedies shall remain available for any breach or threatened breach of this
Agreement or any obligations arising therefrom. 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.
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, return receipt requested, or sent
by recognized international courier service (e.g., Federal Express, DHL, etc.),
telex, telegram or facsimile transmission, with charges prepaid. The address for
all notices or other communications required to be sent to SCEA or Developer,
respectively, shall be the mailing address stated in the preamble hereof, or
such other address as may be provided by written notice from one party to the
other on at least ten (10) days' prior written notice. Any such notice shall be
effective upon the date of receipt, as confirmed by the sending party.
16.2 FORCE MAJEURE. Neither SCEA nor Developer 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; 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 Developer'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) business days of discovery of any such Force Majeure condition. If
notice of the existence of any Force Majeure condition is provided within such
period, the time for performance or cure shall be extended for a period equal to
the duration of the Force Majeure event or circumstance described in such
notice, except that any such cause shall not excuse the payment of any sums owed
to SCEA prior to, during or after any such Force Majeure condition. In the event
that the Force Majeure condition continues for more than one hundred and twenty
(120) days, SCEA may terminate this Agreement for cause by providing written
notice to Developer to such effect.
16.3 NO PARTNERSHIP OR JOINT VENTURE. The relationship between SCEA and
Developer, respectively, is that of licensor and licensee. Both parties are
independent contractors and are not the legal representative, agent, joint
venturer, partner or employee of the other party for any purpose whatsoever.
Neither party has any right or authority to assume or create any obligations of
any kind or to make any representation or warranty on behalf of the other party,
whether express or implied, or to bind the other party in any respect
whatsoever.
16.4 ASSIGNMENT. SCEA has entered into this Agreement based upon the
particular reputation, capabilities and experience of Developer and its
officers, directors and employees. Accordingly, Developer may not assign this
Agreement or any of its rights hereunder, nor delegate or otherwise transfer any
of its obligations hereunder, to any third party unless the prior written
consent of SCEA shall first be obtained. This Agreement shall not be assigned in
contravention of Section 14.2(xi). Any attempted or purported assignment,
delegation or other such transfer, directly or indirectly, without the required
consent of SCEA shall be void and a material breach of this Agreement. Subject
to the foregoing, this Agreement shall inure to the benefit of the parties and
their respective successors (other than under the conditions set forth in
Section 14.2(xi)) and permitted assigns. SCEA shall have the right to assign any
and all of its rights and obligations hereunder to any affiliate(s).
16.5 SUBCONTRACTORS. Developer shall not sell, assign, delegate,
subcontract, sublicense or otherwise transfer or encumber all or any portion of
the licenses herein granted; provided, however, that Developer may retain those
subcontractor(s) to assist with the development and/or testing of Licensed
Products (or portions thereof) which (i) have signed a Nondisclosure Agreement
and a Developer Agreement with SCEA (the "PlayStation Agreements") in full force
and effect throughout the term of such development or (ii) have signed an
SCEA-approved subcontractor agreement between Developer and such subcontractor,
which subcontractor agreement shall contain substantially identical terms to the
Nondisclosure Agreement, the confidentiality provisions of this Agreement and
Section 7 of this Agreement ("Subcontractor Agreement"). 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. Developer agrees to provide a copy of any such Subcontractor
Agreement to SCEA prior to and following execution thereof. Developer shall not
disclose to any subcontractor any Confidential Information of SCEA (as defined
herein and in the Nondisclosure Agreement), including, without limitation, any
Development Tools or other Sony Materials, or allow any usage of the Development
Tools by any such subcontractor(s) unless and until either the PlayStation
Agreements or a Subcontractor Agreement have been executed. Notwithstanding any
consent which may be granted by SCEA for Developer to employ any such
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permitted subcontractor(s), or any such separate agreement(s) that may be
entered into by Developer with any such permitted subcontractor, Developer shall
remain fully liable for its compliance with all of the provisions of this
Agreement and for the compliance of any and all permitted subcontractors with
the provisions of any agreements entered into by such subcontractors in
accordance with this Section 16.5. Developer shall use its best efforts to cause
its subcontractors employed hereby to comply in all respects with the terms and
conditions of this Agreement, and hereby unconditionally guarantees all
obligations of its subcontractors.
16.6 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 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).
16.7 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 courts of the County of San Mateo, State of California (if under
State law) or the Northern District of California (if under Federal law or
pursuant to diversity jurisdiction). 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 brought to enforce the terms of this Agreement or to
adjudicate any dispute arising hereunder.
16.8 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 Agreement or to file or defend any action arising out of this Agreement,
then the prevailing party in any such action shall be entitled, in addition to
any other rights and remedies available to it at law or in equity to recover
from the other party its reasonable fees for attorneys and expert witnesses,
plus such court costs and expenses as may be fixed by any court of competent
jurisdiction. The term "prevailing party" for the purposes of this Section shall
include- a defendant who has by motion, judgment, verdict or dismissal by the
court, successfully defended against any claim that has been asserted against
it.
16.9 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 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, 7, 11, and 13 of this Agreement would cause irreparable harm to
SCEA, the extent of which would be difficult to ascertain. Accordingly,
Developer agrees that, in addition to any other remedies to which SCEA may be
entitled, in the event of a breach by Developer or any of its employees or
permitted subcontractors of any such Sections of this Agreement, SCEA shall be
entitled to the immediate issuance without bond of ex parte injunctive relief
enjoining any breach or threatened breach of any or all of such provisions. In
addition, Developer shall indemnify SCEA hereto 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 such
breach.
16.10 SEVERABILITY. In the event that any provision of this Agreement
(or portion thereof) is determined by a court of competent jurisdiction to be
invalid or otherwise unenforceable, such provision (or 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 Agreement, while the remainder of this Agreement shall continue in
full force and remain in effect according to its stated terms and conditions.
16.11 SECTIONS SURVIVING EXPIRATION OR TERMINATION. The following
sections shall survive the expiration or earlier termination of this Agreement
for any reason: 4, 5.2, 9, 10, 11, 13, 14.5, 15, 16.4, 16.5, 16.6, 16.7, 16.8,
16.9, and 16.10.
16.12 WAIVER. No failure or delay by either party in exercising any
right, power or remedy under this Agreement shall operate as a waiver of any
such right, power or remedy. No waiver of any provision of this Agreement shall
be effective unless in writing and signed by the party against whom such waiver
is sought to be enforced. Any waiver by either party of any provision of this
Agreement shall not be construed as a waiver of any other provision of this
Agreement, nor shall such waiver operate as or be construed as a waiver of such
provision respecting any future event or circumstance.
16.13 MODIFICATION. No modification of any provision of this Agreement
shall be effective unless in writing and signed by both of the parties.
16.14 HEADINGS. The section headings used in this Agreement are intended
primarily for reference and shall not by themselves determine the construction
or interpretation of this Agreement or any portion hereof.
16.15 INTEGRATION. This Agreement (together with the Exhibits attached
hereto) constitutes the entire
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agreement between SCEA and Developer and supersedes all prior or contemporaneous
agreements, proposals, understandings and communications between SCEA and
Developer, 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 13 hereto shall
remain in full force and effect.
16.16 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.
16.17 CONSTRUCTION. This Agreement shall be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against either of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first written above.
SONY COMPUTER THE LIGHTSPAN PARTNERSHIP, INC.
ENTERTAINMENT AMERICA
By: /s/ MASAYUKI CHATANI By: /s/ CARL ZEIGER
-------------------------------- ---------------------------------
Name: Masayuki Chatani Name: Carl Zeiger
Title: VP Business & Technology Title: President & COO
Date: 2/24/00 Date: 2/15/00
NOT AN AGREEMENT UNTIL
EXECUTED BY BOTH PARTIES
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EXHIBIT A
Development Site(s):
-------------------------------- ---------------------------------
-------------------------------- ---------------------------------
-------------------------------- ---------------------------------
Developer Designee(s):
-------------------------------- ---------------------------------
*******
Development Site(s):
-------------------------------- ---------------------------------
-------------------------------- ---------------------------------
-------------------------------- ---------------------------------
Developer Designee(s):
-------------------------------- ---------------------------------
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EXHIBIT B
DEVELOPMENT TOOL TRANSFER FORM
FROM: TO:
------------------------------ ---------------------------------
------------------------------ ---------------------------------
------------------------------ ---------------------------------
------------------------------ ---------------------------------
[Original Development Site] [New Development Site]
DATE OF TRANSFER:
--------------
DEVELOPER DESIGNEE AT NEW DEVELOPMENT SITE:
---------------------------
TOOL DESCRIPTION AND SERIAL NUMBERS:
Each Developer hereby agrees that the transfer of Development Tools hereunder is
subject to the terms and conditions of the Licensed Developer Agreement between
New Developer and SCEA. All rights and responsibilities with respect to the
transferred Development Tools shall be assumed by the Developer at the New
Development Site. Each Developer understands that all rights in and to the
Development Tools (or any portion thereof), including without limitation all of
SCEA's Intellectual Property Rights therein, are and shall be the exclusive
property of SCEA. Neither Developer hereunder shall do or cause to be done any
act or thing in any way impairing or tending to impair any of SCEA's rights,
title and/or interests in or to the Development Tools (or any portion thereof).
Old Developer Signature: New Developer Signature APPROVED:
Sony Computer
Entertainment America
------------------------ -----------------------
By: By: By:
--------------------- -------------------- --------------------
Name: Name: Name:
------------------- ------------------ ------------------
Title: Title: Title:
------------------ ----------------- -----------------
Date: Date: Date:
------------------- ------------------ ------------------
CONFIDENTIAL
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