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EXHIBIT 10.20
* Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 230.406
Omitted portions have been filed
separately with the Securities and
Exchange Commission
SALE AND LICENSE AGREEMENT
This License Agreement (the "Agreement") is entered into as of the 26th day of
January, 1996, by and between SONY COMPUTER ENTERTAINMENT AMERICA, a division of
Sony Interactive Entertainment Inc. (hereinafter "Sony"), and The Lightspan
Partnership, Inc. (hereinafter "Licensee").
TERM SCHEDULE
All information contained in this Term Schedule is set out for ease of
reference, and is to be incorporated and read in conjunction with the
applicable terms and conditions contained herein, as well as this Agreement in
whole.
1. PARTIES: Sony Computer Entertainment America
The Lightspan Partnership, Inc.
2. NOTICES: Sony Computer Entertainment The Lightspan Partnership,
America Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Suite 300
Attn: Executive Vice ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
President of Business Attn: ▇▇▇ ▇▇▇▇▇▇
Development Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: With a copy to:
Sony Interactive
Entertainment Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Executive Vice
President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
3. DESCRIPTION OF
SERVICES: Sale of PlayStation(TM) game consoles for distribution to
the School Market only. License to develop educational
software compatible with the PlayStation game console,
subject to Sony's approval as set forth in Section 6 of
the Agreement.
4. EXCLUSIVITY: The license granted hereunder shall be non-exclusive.
5. LICENSED
TRADEMARKS: a. "PlayStation"
b. PS Logo
c. PlayStation Logo
6. LICENSED
TERRITORY: United States and Canada
7. INITIAL TERM: Four (4) years.
8. NONREFUNDABLE
PAYMENT: See Exhibit B.
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9. MINIMUM ORDER QUANTITY
FOR 1996: [***] of PlayStation Hardware to be ordered and
delivered in 1996. Future minimum order quantities
shall be determined as set forth in Section 4.4.
10. REQUIRED LEGAL COPY: "Licensed by Sony Computer Entertainment America.
PlayStation and the PlayStation logos are
trademarks of Sony Computer Entertainment Inc. (R)
1995 Sony Interactive Entertainment Inc."
Licensee shall consult with Sony regarding the
credit for each software title developed by
Licensee.
[END OF TERM SCHEDULE]
TERMS AND CONDITIONS
WHEREAS, Sony and/or its affiliates have developed a CD-based interactive
console for playing video games and for other entertainment purposes known as
the PlayStation(TM) Game Console (as defined below) and also own or have the
right to grant licenses to certain intellectual property rights including the
trademark(s) identified more fully in the Term Schedule attached hereto (the
"Trademarks") used in connection with the PlayStation Game Console.
WHEREAS, Licensee desires to be granted the right to acquire units of the
PlayStation Game Console for distribution in solely in the School Market, and
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 and Licensee have entered into a Developer Agreement, dated as
of January 12, 1996, regarding the development of educational software for the
PlayStation Game Console (hereinafter the "Developer Agreement").
WHEREAS, Sony is willing, on the terms and subject to the conditions of this
License Agreement, to grant Licensee the right to acquire and distribute units
of the PlayStation Game Console and to grant Licensee the desired non-exclusive
license to distribute Licensed Products solely in the School Market, and Sony
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 "Discs" shall mean the CD-ROM media which contains Executable
Software.
1.2 "School Market" shall mean distribution directly by Licensee to and
for elementary and secondary (i.e., K-12) students, through distribution and
sale to elementary and secondary (i.e., K-12) public and private schools in the
Licensed Territory.
1.3 "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
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Sony which is intended to be combined with Licensee Software for execution on a
PlayStation Game Console and has the ability to communicate with the software
resident in the PlayStation Game Console.
1.4 "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.
1.5 "Licensed Territory" means the countries listed in the Term Schedule.
1.6 "Licensed Products" shall mean each unit of Executable Software
embodied on Discs and including all Printed Materials and Packaging.
1.7 "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. All Licensee Software shall be educational in nature.
1.8. "PlayStation Game Console" means the Sony video game console Part
No. SCPH-▇▇▇▇▇▇▇▇▇▇ or functional equivalent, which version is available to
consumers in the retail market in the Licensed Territory as of the date of this
Agreement.
1.9 "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 therein).
1.10 "PlayStation Hardware" means the finished hardware components to be
provided to Licensee by Sony, including the PlayStation Game Console and all
peripherals and accessories related thereto.
1.11 "Sony Materials" means any data, technology, object code, source
code, documentation, and hardware provided or supplied to Licensee by Sony,
including, without limitation, any portion or portions of the PlayStation
Hardware and development tools.
2. LICENSES.
Sony hereby grants to Licensee, and Licensee hereby accepts, for the term
of this Agreement, within the Licensed Territory, under Sony's Intellectual
Property Rights, including without limitation any relevant patents Sony may own
or have acquired by license, a non-exclusive, nontransferable license, without
the right to sublicense (except as specifically provided herein): (i) to
reproduce and distribute executable files for execution on a PlayStation Game
Console incorporating Licensee Software which has been developed in accordance
with the provisions of the Developer Agreement and this License Agreement,
including without limitation, Section 7 of the License Agreement; (ii) to
market, distribute and sell such Licensed Products and the PlayStation Hardware
solely in the School Market; (iii) to use the Licensed Trademarks in connection
with the packaging of the Licensed Products; and (iv) to sublicense to end
users the right to use the Licensed Products for non-commercial purposes only
and not for public performance.
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3. PLAYSTATION HARDWARE.
3.1 SALE OF PLAYSTATION HARDWARE. Sony hereby agrees to sell to Licensee,
and Licensee hereby accepts, for the term and subject to the conditions set
forth herein, the PlayStation Hardware for the consideration set forth below in
Section 4 and Exhibit B hereto. All sales of PlayStation Hardware to Licensee
shall be governed by the Standard Terms and Conditions of Sale attached hereto
as Exhibit A, which may be amended from time to time by Sony ("Terms and
Conditions"). Sony agrees to provide such number of units of the PlayStation
Hardware as Licensee may reasonably request, subject to availability, during
the term of this License Agreement. Licensee agrees to acquire all PlayStation
Hardware directly from Sony or from a Sony-approved supplier and not from any
third party.
3.2 FORECASTS. During the Term of the Agreement, Licensee agrees to give
Sony a written forecast of demand for PlayStation Hardware every three (3)
months for the next eighteen (18) months on a rolling basis in advance of
expected delivery of units to Licensee in order for Sony to have the ability to
meet Licensee's demand.
3.3 SERVICE. The parties shall discuss entering into a separate agreement
for service and maintenance of the PlayStation Hardware, but Sony's warranty on
such PlayStation Hardware sold to Licensee shall otherwise be governed by the
Terms and Conditions and this License Agreement.
3.4 DEMONSTRATION UNITS OF PLAYSTATION HARDWARE. Notwithstanding other
provisions of this Agreement and Exhibits A and B, Sony agrees to provide to
Licensee [***] units of PlayStation Hardware at the then current price as
determined in Exhibit B on the date of delivery of such units provided that no
later than October 1, 1996 Licensee takes delivery of same. Payment for such
units shall not be due and payable until December 31, 1996, at which time
payment shall be due and payable in full. The units of PlayStation Hardware
provided to Licensee in this Section shall be used by Licensee for
demonstration purposes only in order for Licensee to demonstrate the Licensed
Products and PlayStation Hardware to the School Market on a limited trial
basis. Licensee will provide to Sony a written accounting of the use of these
demonstration systems in a manner to be agreed upon mutually by Licensee and
Sony.
4. COMPENSATION FOR PLAYSTATION HARDWARE AND LICENSED PRODUCTS.
4.1 CONSIDERATION FOR PLAYSTATION HARDWARE AND LICENSED PRODUCTS. The
nonrefundable amount to be paid by Licensee (the "Nonrefundable Payment") [***]
shall be as set forth in Exhibit B. [***] All Nonrefundable Payments due
hereunder shall be made in United States currency drawn on a United States
bank, unless otherwise specified between the parties.
4.2 ORDER AND PAYMENT TERMS FOR PLAYSTATION HARDWARE AND LICENSED
PRODUCTS. Licensee shall issue to Sony written purchase order(s) in accordance
with the Terms and Conditions. Such orders shall reference this Agreement,
specify the number of units of PlayStation hardware ordered and state the
requested delivery date, which shall be at least three to six months from the
date of order. Licensee shall provide Sony with a purchase order for each order
placed.
4.3 NO DEDUCTIONS FROM NONREFUNDABLE PAYMENT. No costs incurred in the
development, manufacture, marketing, sale, and/or distribution of the
PlayStation Hardware and Licensed Products shall be deducted from any
Nonrefundable Payments payable to Sony hereunder.
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Similarly, there shall be no deduction from the Nonrefundable Payments
otherwise owed to Sony hereunder as a result of any uncollectible accounts
owed to Licensee, or for any credits, discounts, royalties, allowances or
returns which Licensee may credit or otherwise grant to any third party, 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
PlayStation Hardware and/or Licensed Products and/or arising with respect to
the payment of any Nonrefundable Payment hereunder. In addition to the
Nonrefundable Payments provided to Sony hereunder, Licensee shall be solely
responsible for and bear any cost relating to 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 Sony may be
required to collect or pay. Licensee 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 Licensee of any such Nonrefundable
Payment. In addition, Licensee shall pay all personal property taxes or similar
charges, however imposed, on the ownership, use and possession of the
PlayStation Hardware and Licensed Products during the term of the License
Agreement. The receipt or acceptance by Sony of any Nonrefundable Payment made
shall not prevent Sony, or its agent, from subsequently challenging the
validity or accuracy of such payment within four years of invoice.
4.4. Minimum Order Quantity Cap. Licensee shall purchase and have
delivered the minimum number of units set forth in the Term Schedule for
calendar year 1996. Licensee shall also be required to meet a minimum order
quantity requirement for subsequent calendar years of the term, which shall be
[***] of the number of units forecasted for such calendar year based on the
forecast provided to Sony by Licensee in October of the preceding calendar
year. Failure of Licensee to place orders for the minimum number of units shall
subject Licensee to the termination provisions of Section 14.2.
5. Limitations on Licenses; Reservation of Rights.
5.1. 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 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 make payments in
accordance with Section 4 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.
5.2 Limitations on Distribution.
5.2.1 Limitations on Channel of Distribution. Licensee agrees that the
rights granted herein from Sony to Licensee are granted for the School Market
only. No publication, marketing, distribution or sale of PlayStation Hardware
or Licensed Products, directly or indirectly, may be made or solicited by
Licensee under this License Agreement to third parties in the retail channel or
to distributors, agents, representatives or other third parties who sell to the
retail channel, and Licensee agrees that it will not knowingly sell the
PlayStation Hardware or Licensed Products to any persons who may resell them
outside the School Market. Sales to distributors, agents, representatives
and/or any other third parties shall be subject to Sony's prior written
approval in its sole discretion. In the event that Licensee desires to publish,
market, distribute and/or sell the Licensed Products outside of the School
Market, it must negotiate a separate agreement with Sony for such rights, and
Sony shall have a right of first refusal for any distribution,
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publication, marketing or sale of such Licensed Products. Licensee
agrees that, in the event that units of the PlayStation Hardware or Licensed
Products are returned to Sony, either directly from a consumer or through a
retail distributor or retailer, it will reimburse Sony for either the full
amount of compensation for such unit as set forth in Exhibit B or the amount of
compensation paid by Sony to such retailer for the returned unit, whichever is
less.
5.2.2 LIMITATIONS ON LICENSED TERRITORY. 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.
5.2.3 LIMITATIONS ON IN-SCHOOL VS. IN-HOME DISTRIBUTION. Licensee
agrees that the ratio of units of PlayStation hardware distributed to schools
for school use vs. units of PlayStation Hardware distributed to students for
home use shall be less than 1 to 5.
5.3 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.
5.4 LIMITATION ON LICENSED TRADEMARKS. The Licensed Trademarks shall be
subject to the Guidelines set forth in Exhibit C hereto. Nothing contained in
the Term Schedule or this License Agreement shall in any way grant Licensee the
right to use the trademark "Sony" in any manner as a trademark, trade name,
service ▇▇▇▇ or logo other than as expressly permitted by Sony. Sony may amend
the above Licensed Trademarks upon reasonable notice to Licensee. Licensee will
have no right to or interest in any trademarks or trade names owned, used or
claimed now or in the future by Sony Computer Entertainment America, Sony
Interactive Entertainment Inc., Sony Corporation of America, Sony Computer
Entertainment Inc. or Sony Corporation (Japan) and their affiliates or
licensors.
5.5 RESERVATION OF SONY'S RIGHTS. The licenses granted in this License
Agreement extend only to development, marketing, distribution and sale of
Licensed Products for the School Market for use on the PlayStation Game Console,
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 outside the School Market
(including without limitation to or through retail channels of distribution) or
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
PlayStation Game Console or any Intellectual Property Rights related to the Sony
Materials and PlayStation Game Console (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
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displays or depicts any of the Licensed Trademarks. The use of the Licensed
Products or PlayStation Hardware as a premium, promotional tie-in or for any
other secondary use is not licensed hereunder.
5.6 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 PlayStation Game
Console.
6. QUALITY STANDARDS FOR THE LICENSED PRODUCTS.
6.1 QUALITY ASSURANCE OF PRODUCT PROPOSAL. The Licensed Products,
including, without limitation, the contents 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 of quality. Before Licensee commences
programming of the Licensee Software for each of the Licensed Products,
Licensee shall submit to Sony, for Sony's written approval or disapproval, a
written proposal (the "Product Proposal") setting forth (i) the description of
the proposed Licensed Product, including the proposed title and story line,
(ii) a description of any licensed rights of third parties to be used by
Licensee, (iii) a description of the user interface characteristics, (iv) a
description of any multiple PlayStation Game Console options, (v) the
development team profile, (vi) a description of any special hardware/software
requirements, (vii) the scheduled and/or anticipated delivery dates with
respect to any deliverable items and/or release dates with respect to the
proposed Licensed Product, and (viii) any additional information that Sony may
deem to be useful in evaluating the proposed Licensed Product. In the event
that Sony rejects such Product Proposal, Sony shall have the right in its sole
discretion to request Licensee to make revisions or modifications to such
proposal, and any such changes shall be made at Licensee's cost. Licensee shall
notify Sony promptly in writing in the event of any material proposed change in
any portion of the Product Proposal and shall, from time to time at the request
of Sony for quality assurance purposes, submit work-in-progress on the
Licensed Product during the development process, in a medium designated by
Sony, for Sony's approval. 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 twelve (12) month period following the effective date of
this Agreement. Licensee agrees that all Licensed Products will be of high
quality and shall be designed (if an original title for the PlayStation Game
Console) or modified (if a pre-existing title) to substantially utilize the
particular capabilities of the Sony Materials and the PlayStation Game Console.
6.2 APPROVAL OF EXECUTABLE SOFTWARE. Following Sony's written approval
of the Product Proposal, Licensee shall on or before the date specified in the
Product Proposal, deliver to Sony for its inspection and evaluation, a
prototype of the Executable Software for 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. If such Executable Software is
disapproved, Sony shall specify the reasons for such disapproval and state what
corrections and/or improvements are necessary. 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.
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6.3 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 Packaging (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 by Sony. At the time prototype Executable Software for a
proposed 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 the same quality as that
associated with high quality consumer products. If any of the Printed Materials
are disapproved, Sony shall specify the reasons for such disapproval and state
what corrections are necessary. After making the necessary corrections to the
disapproved Printed Materials, Licensee may submit 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. 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.
6.4 ADVERTISING MATERIALS. Pre-production samples of the advertising,
merchandising, promotional, and display materials of or concerning the Licensed
Products (collectively referred to hereinafter as the "Advertising Materials")
shall be submitted by Licensee to Sony, free of cost, for Sony's evaluation and
approval as to quality, style, appearance, usage of any of the Licensed
Trademarks, and appropriate reference of the notices, prior to any actual
production, use, or distribution of any such items by Licensee or in its
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 PlayStation Game
Console at Sony's expense, subject to giving Licensee reasonable prior notice
of 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 6.5 below.
6.5 LABELING REQUIREMENTS. Sony reserves the right to affix or have
affixed to all units of PlayStation Hardware, Executable Software and all
Printed Materials for each unit of the Licensed Products a conspicuous, legible
and irremovable notice to be specified in a template which will 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. Such template shall specify that such units of PlayStation Hardware
and Licensed Products are for educational use only and not for resale to the
retail market. 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
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.
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6.6 STANDARDS FOR LICENSED PRODUCTS IN SCHOOL MARKET. Because of the
inherent differences between educational software and game software, Sony and
Licensee acknowledge that different or additional quality standards and
requirements may be necessary for distribution of Licensed Products to the
School Market. Therefore, both Sony and Licensee shall meet to discuss the
standards set forth in this Section 6 and to decide whether any such different
or additional quality standards should apply for Licensed Products distributed
in the School Market. Notwithstanding the foregoing, Sony reserves the right in
its sole discretion to determine, and require Licensee to meet, any and all
standards with respect to the quality and content of the Licensed Products.
7. MANUFACTURE OF THE LICENSED PRODUCTS.
7.1 MANUFACTURE BY SONY.
7.1.1 APPOINTMENT OF SONY AS EXCLUSIVE MANUFACTURER OF DISCS.
Licensee hereby appoints Sony, and Sony hereby accepts such appointment, as the
exclusive manufacturer of all Discs of the Licensed Products. Licensee
acknowledges and agrees that it shall purchase from Sony one hundred (100%)
percent of its requirements for finished Discs of the Licensed Products during
the term of the Agreement. Licensee shall also have the option, in its
discretion, of appointing Sony as the exclusive manufacturer of Packaging and/or
Printed Materials, subject to Section 7.1.3 below. Sony shall provide to
Licensee written specifications setting forth terms relating to the
manufacturing of Licensed Products, Packaging and their component parts
("Specifications") subsequent to execution of this Agreement, which may be
amended from time to time upon reasonable notice to Licensee. Sony shall have
the right, but no obligation, to subcontract any phase of production of any or
all of the Discs, the Packaging or any part thereof.
7.1.2 CREATION OF MASTER CD-ROM. Following approval by Sony of each
Licensed Product pursuant to Section 6.2, 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 Disc (the "Master CD-ROM") from which all
other copies of the Disc 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 Disc 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 may, at its option,
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 and/or Packaging (at its
sole cost and expense) and subject to Section 7.1.4 with respect to assembly,
Licensee shall deliver such Printed Materials and/or Packaging to Sony, in the
minimum order quantities set forth in Section 7.2.2 below.
7.1.4 MANUFACTURE OF UNITS. Upon approval, pursuant to Section 6, of
such pre-production samples of the Executable Software for the Master CD-ROM
and the associated Printed Materials, Sony will, in accordance with the terms
and conditions set forth in this Section 7, and at Licensee's expense (a)
manufacture Discs of the Licensed Product for Licensee; (b) manufacture
Licensee's Printed Materials (subject to Licensee's right to manufacture its
own Printed Materials at Licensee's sole cost and expense); and (c) package the
Discs with the Printed Materials (subject to Licensee's right to manufacture
its own Packaging at Licensee's sole cost and expense). Licensee shall have the
option of assembling the Discs, Packaging and Printed Materials at its sole
cost and
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expense, in which case it will purchase the Discs and, at its option, the
Packaging and Printed Materials from Sony in accordance with pricing set forth
in the Specifications, subject to the limitations set forth in Section 7.2.1.
7.2 PRICE, PAYMENT AND TERMS FOR MANUFACTURE OF LICENSED PRODUCTS.
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.
Purchase price(s) shall be stated in United States dollars and are subject to
change by Sony at any time upon reasonable notice to Licensee; provided,
however, the applicable price shall not be changed with respect to any units of
the Licensed Products which are the subject of an effective purchase 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
6.1, a non-cancelable Purchase Order for at least [***] units of such Licensed
Product. In the event that Sony manufactures the Printed Materials for the
Licensee pursuant to Section 7.1.3 above, Licensee may, at Licensee's option,
allow Sony to purchase an additional [***] 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 such Licensed Products in
the minimum reorder quantity of [***] units per order, provided that reorder
quantities may be less than [***] 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. Sony shall use good faith efforts to establish
a line of credit for Licensee. In the event that an order or orders placed by
Licensee exceed Licensee's line of credit or Licensee fails to pay on time or
otherwise fails to meet Sony's credit requirements, Sony shall have the right
to require Licensee, at any time with respect to such purchase order or orders,
to provide Sony with a suitable letter of credit, letter of guarantee or an
equivalent, each of which must be acceptable to Sony. Where credit is extended,
all orders must be entered and cleared by the Credit Department before they are
considered valid orders. Orders will be invoiced upon shipment. Each invoice
will be paid in full within thirty (30) days of the date of the invoice. Upon
notice by Sony, Licensee will furnish Sony such financial information as Sony
may reasonably request for credit approval. If credit is extended, Sony
reserves the right to establish credit limits for Licensee which may be
modified from time to time at Sony's sole discretion. Sony may, in its sole
discretion, cancel any order at any time or delay shipment of Licensed Products
if Customer fails to meet credit requirements established by Sony, or if
Licensee exceeds its line of credit and
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*CONFIDENTIAL TREATMENT REQUESTED
11
fails to provide Sony with a suitable letter of credit, letter of guarantee or
acceptable equivalent. 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 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 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.
8.1 GENERAL. In accordance with the provisions of this License Agreement,
Licensee shall, at no expense to Sony, diligently market, sell and distribute
the Licensed Products in the School Market, and shall use its reasonable best
efforts to stimulate demand for such Licensed Products in such School Market in
the Licensed Territory and to supply any resulting demand. Licensee shall use
its reasonable best efforts to protect the Licensed Products from and against
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 School Market; provided, however,
Sony shall not directly or indirectly resell any such units of the Licensed
Products within or outside of the Licensed Territory without Licensee's prior
written consent.
8.2 MARKET RESEARCH MODEL. Both parties acknowledge and agree that it is
their intent to review the results of the distribution of PlayStation Hardware
and Licensed Products for market
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12
research purposes. Sony and Licensee will jointly agree on an acceptable
methodology for any research of the PlayStation Hardware usage in homes and
schools. Licensee will provide Sony with any market information which Sony
reasonably requests and which is not deemed to be confidential or sensitive to
the School Market.
9. REPRESENTATIONS AND WARRANTIES.
9.1 REPRESENTATIONS AND WARRANTIES OF SONY. Sony represents and warrants
solely for the benefit of Licensee that Sony has the right, power and authority
to enter into this License Agreement and to fully perform its obligations
hereunder.
9.2 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 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 solely to the School Market
and 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.
10. INDEMNITIES; LIMITED LIABILITY.
10.1 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.
10.2 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
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13
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 4 or 7.2 hereto or any breach of Licensee'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 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 development, manufacture, sale, marketing and/or use of the
Licensed Products manufactured by Sony hereunder or any sale and/or use of any
of the PlayStation Hardware 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.
10.3 LIMITATION OF LIABILITY; LICENSEE'S OBLIGATIONS.
10.3.1 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 AND/OR THE PLAYSTATION
HARDWARE BY LICENSEE OR ANY END-USER, WHETHER UNDER THEORY OF CONTRACT, TORT
(INCLUDING NEGLIGENCE), INDEMNITY, THE ESTABLISHMENT, DEVELOPMENT OR
MAINTENANCE OR BUSINESS REPUTATION OR GOODWILL, COST OF CAPITAL, 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 10.1 AND ANY WARRANTY
IN SECTION 10.4 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.
10.3.2 LIMITATION OF LICENSEE'S LIABILITY. IN NO EVENT SHALL
LICENSEE BE LIABLE TO SONY FOR ANY PROSPECTIVE PROFITS, OR SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH (i) THIS LICENSE
AGREEMENT, (ii) THE USE OR DISTRIBUTION IN ACCORDANCE WITH THE TERMS AND
CONDITIONS OF THIS LICENSE AGREEMENT OF ANY OBJECT CODE PROVIDED BY SONY, IN
WHOLE OR IN PART, OR ANY LICENSEE SOFTWARE BY LICENSEE OR ANY THIRD PARTY, IN
WHOLE OR IN PART, WHETHER
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CONFIDENTIAL
14
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, 5, 10.2, 11.2, OR 13 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 10.2 OR 16.9.
10.3.3 LICENSEE'S OBLIGATIONS. If at any time or times subsequent to
the approval of the Executable Software pursuant to Section 6.2, 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.
10.4 WARRANTIES: DISCLAIMER OF WARRANTIES.
10.4.1 MANUFACTURING WARRANTY. Sony warrants that the units of
Licensed Product that are manufactured by Sony for Licensee pursuant to Section
7 of this Agreement shall, at time to delivery to Licensee, be free from defects
in material. The sole obligation of Sony under this warranty shall be, for a
period of one year 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 factory defective disc(s)
(i.e., those discs that are not free from defects in material), 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 placing liability on Sony under
the above warranty, Licensee shall reimburse Sony for expenses incurred in
shipping, processing and analyzing the discs. Sony's judgment as to the origin
of the defect shall be final and binding.
10.4.2 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 PLAYSTATION GAME CONSOLE 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 PLAYSTATION
GAME CONSOLE 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.
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CONFIDENTIAL
15
11. COPYRIGHT, TRADEMARK AND TRADE SECRET RIGHTS.
11.1 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.
11.2 SONY RIGHTS.
11.2.1. 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 contesting or 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. If, during the term of this
Agreement, any of Sony's rights, title and/or interest in or to any or all of
the Licensed Trademarks (or any portion thereof) should become for any reason
whatsoever vested in Licensee by operation of law or otherwise, Licensee agrees
that it shall immediately upon the earlier of Sony's request or on the
termination or expiration of this Agreement, assign any and all rights,
together with any goodwill associated therewith, to Sony or Sony's designee.
Licensee agrees that upon any termination (for any cause) or the expiration of
this Agreement it shall immediately cease to use any and all Licensed
Trademarks.
11.2.2 LICENSE OF SONY MATERIALS AND PLAYSTATION GAME CONSOLE.
Subject to the rights granted by Sony to Licensee hereunder, all rights with
respect to the Sony Materials and PlayStation Game Console, 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 PlayStation Game
Console (or any portion thereof), other than the non-exclusive license and
privilege during the term hereof to use the Sony Materials and PlayStation Game
Console 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 PlayStation Game Console (or any portion thereof). If, during
the term of this Agreement, any of Sony's rights, title and/or interest in or
to any or all of the Equipment or Sony Materials (or any portion thereof)
should become for any reason whatsoever vested in Licensee by operation of law
or otherwise, Licensee agrees that it shall immediately upon the earlier of
Sony's request or on the termination or expiration of this Agreement, assign
any and all such rights, together with any good will associated therewith, to
Sony or Sony's designee.
11.3 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 15.3, below.
12. 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 or the PlayStation Hardware have been or are being
infringed upon by any third party, then the party with
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16
knowledge of such infringement or apparent infringement shall promptly notify
the other party. Sony shall have the sole right, in its discretion, to institute
and prosecute lawsuits against Third Parties for such infringement of Sony's
Intellectual Property Rights. Licensee shall have the right, in its discretion,
to institute and prosecute lawsuits against third persons for such infringement
of Licensee's Intellectual Property Rights which are distinct from Sony's
Intellectual Property Rights. If Licensee does not institute an infringement
suit within thirty (30) days after Sony's written request that it do so, Sony
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 expenses incurred as a result of such cooperation.
13. CONFIDENTIALITY.
13.1 NONDISCLOSURE AGREEMENT. Licensee hereby acknowledges that the
Nondisclosure Agreement dated September 28, 1995 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 13, the provisions of
the Nondisclosure Agreement shall control with respect to the Confidential
Information of Sony.
13.2 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 the Licensee
Software as provided to Sony pursuant to this License Agreement and all
documentation and information relating thereto 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.
13.3 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 16.5 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
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copyright notice, trademark notice and/or other proprietary legend set forth on
or contained within any of the Confidential Information.
13.4 OBLIGATIONS UPON UNAUTHORIZED DISCLOSURE.
13.4.1 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.
13.4.2 ACCOUNTING, ETC. If Licensee violates or fails to comply
with any of the terms or conditions of this Section 13 or Section 5 hereto,
Sony shall be entitled to an accounting and repayment of all forms of
compensation, commissions, remuneration or benefits which Licensee 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 Sony may be entitled under
this Agreement or otherwise, at law or in equity.
13.5 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
immediately 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.
13.6 CONFIDENTIALITY OF AGREEMENT. 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.
Neither party shall disclose any of the terms of this License Agreement without
the prior written permission of the other party. Notwithstanding the foregoing,
Licensee shall not disclose any Confidential Information or any of the terms of
this License Agreement to [***]
CONFIDENTIAL
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in Licensee without Sony's prior written approval.
14. TERM AND TERMINATION
14.1 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") and shall last for the period set forth in the Term Schedule
(the "Term").
14.2 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; (ii) if the Developer
Agreement is terminated for any reason; (iii) 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; (iv) 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; (v) The making by Licensee of a general assignment for the
benefit of creditors; (vi) 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); (vii) The adjudication that Licensee is a bankrupt
or insolvent; (viii) 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; (ix) 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; (x) if control of more
than fifty percent (50%) of the ownership of Licensee or substantially all of
Licensee's assets are transferred to any person or entity; or (xi) if, directly
or indirectly, control of more than twenty-five percent (25%) of the ownership
of Licensee or substantially all of Licensee's assets are transferred to any one
of [***] known or unknown; (xii) if Licensee agrees to port or deliver its
educational software on any other competing technology, meaning a video game
system with real-time animation, video decompression, and/or 3D rendering
including but not limited to products from [***]; or (xiii) Licensee fails to
order the Minimum Order Quantity during any calendar year.
14.3 PRODUCT-BY-PRODUCT TERMINATION BY SONY. In addition to the events of
termination described in Section 14.2 above, Sony, as 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 6.1, above; (b) if Licensee fails to provide Sony in
accordance with the provisions of Section 6.2 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.
14.4 PAYMENTS NONREFUNDABLE. In the event of the termination of this
License Agreement in accordance with any of the provisions of Section 14.2 or
14.3, above, no portion of any payments of any kind whatsoever, including
without limitation any and all Nonrefundable Payments and payments of
manufacturing costs, previously provided to Sony hereunder shall be owed or be
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repayable to Licensee.
15. EFFECT OF EXPIRATION OR TERMINATION.
15.1 INVENTORY STATEMENT. Within thirty (30) days of the date of
expiration or the effective date of termination with respect to any or all
Licensed Products, Licensee shall provide Sony with an itemized statement,
certified to be accurate by an officer of Licensee, specifying the number of
unsold units of the Licensed Products and PlayStation Hardware 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.
15.2 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 15.3 below, Licensee shall have no further right to
continue the development, marketing, sale, and/or distribution of any units of
the Licensed Products or PlayStation Hardware, nor to continue to use the
Licensed Trademarks.
15.3 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
ninety (90) days 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. With respect to existing inventories
of PlayStation Hardware, Sony reserves the right to buy back the inventory at
its then-current fair market value, to allow Licensee to sell off such
inventories subject to the requirements set forth in the first sentence of this
Section, or to require Licensee to destroy such inventories. Subsequent to the
expiration of such ninety (90) day 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.
15.4 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, or if and to the extent
requested by the disclosing 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 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, machine readable or written form by such party or on its behalf at
any time during the term of this License Agreement. Within five (5) working
days after any such destruction, each receiving party shall provide the
disclosing party with an itemized statement certified to be accurate by an
officer of receiving party, indicating the number of copies of the Confidential
Information which have been destroyed, the location and date of such
destruction and the disposition of the remains of such destroyed materials.
15.5 RENEWAL OR EXTENSION OF LICENSE AGREEMENT. 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
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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 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.
15.6 TERMINATION WITHOUT PREJUDICE. The expiration or termination of this
License Agreement in accordance with the provisions of Section 14, above, 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, 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 Term Schedule, 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.
16.2 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; 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 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. If any of these acts or events of force
majeure exceed sixty (60) continuous or cumulative days, then either party may,
as its sole remedy, cancel outstanding orders to the extent not previously
fulfilled by giving the other notice, and neither party will be liable to the
other for damages resulting from such cancellation.
16.3 NO PARTNERSHIP OR JOINT VENTURE. The relationship between Sony and
Licensee, respectively, is that of licensee and licensor. Licensee is an
independent contractor and is not the legal representative, agent, joint
venturer, partner, or employee of Sony 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. 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
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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.
16.5 SUBCONTRACTORS. Licensee shall not sell, lease, assign, delegate,
subcontract, sublicense or otherwise transfer or encumber all or any portion of
the rights herein granted. Licensee shall have the right to employ suitable
subcontractors for the purposes of assisting Licensee with the development of
the Licensed Products, provided that Licensee must obtain the prior written
consent of Sony. 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
Licensee shall have such subcontractor sign a written agreement containing
substantially identical terms to the Nondisclosure Agreement, and the
confidentiality provisions of this Agreement and shall submit a copy of such
agreement to Sony. Any and all agreements between Licensee and its permitted
subcontractors shall provide that Sony is a third party beneficiary of such
agreements and has the full right to bring any actions against such
subcontractors to comply in all respects with the terms and conditions of this
License Agreement. Notwithstanding any consent which may be granted by Sony for
Licensee to employ any such permitted subcontractor(s), or any such separate
agreement(s) that may be entered into by Licensee with any such permitted
subcontractor, 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 16.5 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. Notwithstanding the foregoing, Licensee shall not
subcontract any rights under this agreement to TCI (Telecommunications Inc.) or
Microsoft without Sony's prior written approval.
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 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).
16.7 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 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.
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 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.
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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 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, 3, 5, 6, 7.1.1, 11, and 13 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.
16.10 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.
16.11 SECTIONS SURVIVING EXPIRATION OR TERMINATION. The following sections
shall survive the expiration or earlier termination of this License Agreement
for any reason: 4, 5, 7.2, 9.2, 10, 11, 12, 13, 14.4, 15, 16.4, 16.5, 16.7,
16.8, 16.9, and 16.10 and Exhibits A-C.
16.12. 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.
16.13 MODIFICATION. No modification of any provision of this License
Agreement shall be effective unless in writing and signed by both of the
parties.
16.14 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.
16.15 INTEGRATION. This License Agreement (together with the Term Schedule
and 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 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.
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16.17 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.
16.18 EXPORT CONTROLS. Licensee certifies that it shall not reexport,
directly or indirectly, any PlayStation Hardware or Sony Materials in violation
of U.S. law and regulations. Licensee shall be solely responsible for the
obtaining of the compliance with any required export licenses. Licensee
certifies that the Equipment and any Sony Materials will not be resold or
delivered, directly or indirectly, to entities located in destinations
prohibited under U.S. laws and regulations or resold or delivered, directly or
indirectly, to nationals from those destinations. The prohibited destinations
include Cuba, Iraq, Libya, North Korea, Yugoslavia (Serbia and Montenegro) or
any other countries that are subsequently declared prohibited destinations under
such laws or regulations. Prohibited sales may subject Licensee 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 Sony to Licensee. In addition, Licensee 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.
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 THE LIGHTSPAN PARTNERSHIP, INC.
ENTERTAINMENT AMERICA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇. ▇. ▇▇▇▇▇▇
Title: V.P. Bus. Dev. Title: Chairman & CEO
Date: 02-22-96 Date: 6/30/96
NOT AN AGREEMENT UNTIL EXECUTED BY BOTH PARTIES
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EXHIBIT A
TERMS AND CONDITIONS
Sony Computer Entertainment America ("Sony"), a division of Sony Interactive
Entertainment Inc., does business with its Customers under the terms and
conditions set forth herein. These Terms and Conditions supersede those
contained in any Customer purchase order, request for quotation, acceptance or
other purchasing documents concerning any PlayStation Hardware which are
inconsistent with, different from or in addition to the terms and conditions
stated herein.
1. APPROVAL OF ORDERS: All orders must be in writing or sent via EDI. No
verbal orders will be accepted. All Customer purchase orders for PlayStation
Hardware are subject to acceptance by Sony, including, if appropriate, approval
by Sony's Credit Department. Any statement in a purchase order document that is
not expressly approved or acknowledged in writing by Sony will not be
considered a part of the agreement between the parties.
Please send orders to: Sony Computer Entertainment America
Sales Service Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
2. CREDIT: Sony shall use good faith efforts to establish a line of credit
for Licensee. In the event that an order or orders placed by Licensee exceed
Licensee's line of credit or Licensee fails to pay on time or otherwise fails
to meet Sony's credit requirements, Sony shall have the right to require
Licensee, at any time with respect to such purchase order or orders, to provide
Sony with a suitable letter of credit, letter of guarantee or an equivalent,
each of which must be acceptable to Sony. Where credit is extended, all orders
must be entered and cleared by the Credit Department before they are considered
valid orders. (Orders which require shipment to different locations shall be
considered individual orders.) Upon notice by Sony, Customer will furnish Sony
such financial information as Sony may reasonably request for credit approval.
If credit is extended, Sony reserves the right to establish credit limits for
Customer which may be modified from time to time at Sony's sole discretion.
Sony may, in its sole discretion, cancel any order at any time or delay
shipment of Products if Customer fails to meet credit requirements established
by Sony, or if Licensee exceeds its line of credit and fails to provide Sony
with a suitable letter of credit, letter of guarantee or acceptable equivalent.
While special sales programs may be offered from time to time which
include purchase discounts and/or timing extensions, only Customers that are in
good standing shall be eligible to participate. The amount of credit made
available and the manner in which it has been handled will affect eligibility.
3. TERMS OF SALE: Invoices will be issued and dated as of the merchandise
shipment date. Although prepared daily, invoices are generally batched and
mailed during the week following the week of shipment. Customers to whom Sony
extends credit must pay for Products in full within forty-five (45) days from
date of invoice. No Customers may make deductions or offsets of any kind from
payments due Sony unless such Customer has received a written credit memorandum
or other backup documentation from Sony authorizing such deduction or offset or
Customer has strictly complied with all of the terms of a Sony authorized sales
program. In the event that a check is returned because of insufficient funds or
for any other reason, additional handling charges and fees will be assessed if
the replacement payment is not received in accordance with our stipulated terms.
4. ORDER QUANTITY: All sales orders will be subject to stock availability.
Only master case orders will be accepted for shipment to distribution centers.
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Customer prepacks/stickering will not be accepted as a standard business
practice. However, if an exception is made at Sony's sole discretion, such
prepacks/stickering will require fifteen business days to process and will be
subject to additional minimum quantities and handling charges.
5. FINANCE CHARGE/COSTS OF COLLECTION: A condition of credit is payment of
all purchases in accordance with the terms of sale. If Customer fails to pay
Sony for PlayStation Hardware when due, then, in addition to any other remedies
available to Sony allowed by law for that default, Customer will pay Sony an
additional monthly financing charge equal to the lesser of (a) one and one-half
percent (1.5%) or (b) the maximum monthly interest rate allowed by law, of any
portion of Customer's account not paid within terms stated on invoice,
chargeable during each month that payment remains outstanding and Sony's
reasonable expenses of collection, including but not limited to attorneys' and
experts' fees and court costs. The obligation is considered past due after
forty-five days (45) or in accordance with other terms stated on the invoice.
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.
6. TAXES: Prices for PlayStation Hardware exclude all taxes, including but
not limited to, sales, excise or use taxes. Customer shall pay all sales, use,
ad valorem, excise and/or any other taxes imposed on either party by virtue of
Customer's order, except for taxes based on Sony's net income. Sony will invoice
Customer for any of the taxes that Sony is legally obligated to collect from
Customer.
7. PRICES AND PAYMENT: Payments should be remitted to our lock box at:
Sony Computer Entertainment America
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Current prices are available on the Sony published price sheet for all active
catalog products. Sony shall have the right to change prices to Customer on any
product at any time, except with respect to orders which have been accepted by
Sony prior to such price modifications. Licensee shall be notified of any such
price change. Sony may change the prices for PlayStation Hardware included in a
previously accepted order by giving Customer prior notice. If Customer does not
wish to purchase PlayStation Hardware previously ordered and accepted by Sony
because of any price increase, then Customer may, as its sole remedy, cancel its
purchase, to the extent not previously fulfilled, by giving Sony notice within
ten (10) days of its receipt of a price change notice from Sony.
8. RESCHEDULING AND CANCELLATIONS: Requests for order rescheduling and
cancellations must be in writing and received by Sony according to the following
schedule:
Time Frame Result
Within 30 days of delivery date Purchase order may not be canceled or rescheduled
30-60 days from delivery date Purchase order may not be canceled but may be rescheduled
60-90 days from delivery date Purchase orders may be canceled and rescheduled
Orders put on hold may be canceled at the discretion of Sony.
9. DELIVERY: Requests for specific shipping dates will be honored whenever
possible subject to existing circumstance, and Sony will use reasonable efforts
to meet them. Regardless of the date of actual shipment, Customer will not be
excused from its obligation to pay for PlayStation Hardware when shipped or from
any of its other obligations hereunder. SONY SHALL NOT BE LIABLE FOR ANY
DAMAGES, WHETHER INCIDENTAL, CONSEQUENTIAL OR OTHERWISE, FOR FAILURE TO FILL
ORDERS, DELAYS IN DELIVERY OR ANY ERROR IN THE FILLING OF ORDERS.
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10. METHODS AND POINT OF DELIVERY: Unless otherwise provided by the parties,
Sony will choose the carrier for shipping PlayStation Hardware. Sony's
responsibility for delivery will cease when carrier signs for shipment to
destination as specified. Sony may make partial shipments on Customer orders,
which shipments shall constitute separate sales and may be separately invoiced
and shall be paid for when due, without regards to subsequent shipments. Delay
on shipment or delivery of any particular installment shall not relieve
Customer of its obligation to accept the remaining installments. Regardless of
the party paying freight charges, all risk of loss or damage in transit will be
borne by Customer. All claims for damage to, or loss of, PlayStation Hardware
must be made by Customer directly to the carrier or the insurance company (as
the case my be).
11. TRANSPORTATION COSTS: Unless otherwise provided by the parties, the prices
for PlayStation Hardware will include the payment by Sony of ground
transportation costs but will exclude all other charges including, but not
limited to, charges for insurance, customs and special packaging. Orders
calling for drop shipments or other special handling will be assessed a 3%
handling charge. Charges for the difference between the cost of ground
transportation and the cost of any shipping method other than ground
transportation will be borne by Customer.
12. CLAIMS AND ADJUSTMENT: Claims for adjustments on short or otherwise
unsatisfactory merchandise due to fault of Sony must be made to Sony within
fourteen (14) days of receipt of shipment. In such situations, Sony shall have
the right to examine the applicable merchandise and shipping records at
Customer's location. If the prices for PlayStation Hardware sold to Customer
are prices which have been reduced based on Customer's representation that
Customer has complied with the terms of a Sony authorized sales program and
Customer fails to adequately comply with the terms thereof then, in addition to
any other remedies available to Sony under this Agreement or allowed by law for
that default, Sony may retroactively increase those prices to make them equal
to those prevailing for the quantities of PlayStation Hardware actually
purchased by Customer and Sony will invoice Customer for any resulting increase
in prices.
13. RETURNS AND REPLACEMENTS: Sony will accept returns of mis-shipped or
defective PlayStation Hardware for credit only with prior authorization from
Sony's corporate office and receipt of a Sony Return Authorization form. The
Customer should contact Sony Return Representative to obtain any additional
handling instructions. Customer should request return authorization in writing
or via facsimile to the address listed in the invoice. Any returns which are
received by Sony without a Sony Return Authorization form will be refused and
returned to Customer at Customer's expense. PlayStation Hardware returned is not
to exceed quantity authorized. All returns must have freight prepaid and no
C.O.D.'s will be accepted. Credit will be issued only after PlayStation Hardware
is inspected and approved and will be based on Customer's cost, less a fee for
repair, refurbishment, repackaging and restocking equal to 3%. Returns missing
original components will be charged back on a prorated basis.
Unauthorized Product Returns consist of PlayStation Hardware inadvertently
returned or returned in error to Sony. This category also includes cut-outs
which are no longer returnable, and PlayStation Hardware not originally
distributed by Sony. All Unauthorized Product Returns will be scrapped and no
credit will be issued unless Sony has prior written authorization to return it
freight collect. Unsaleable product, including counterfeit, promotional, used or
illegally imported PlayStation Hardware or empty jewel boxes and/or inserts
returned to Sony will be scrapped and no credit will be issued. All opened
video game software will be returned freight collect. Sony reserves the right
to charge a processing fee on any of the above products received by our returns
center.
From time to time, Sony may delete certain elements of the PlayStation
Hardware from its active catalog. Any such lists are printed on the Sony
current price sheet within the discontinued product section. No credit will be
issued for deleted product which is returned after the date specified in the
heading of each list.
14. CHANGES IN PRODUCTS AND POLICIES. Sony may at any time add, change or
cease
-26- CONFIDENTIAL
27
making available any PlayStation Hardware without notice to Customer, and
Customer shall have no claim against Sony for failure to furnish PlayStation
Hardware of the model, design or type previously sold or for failure to install
modification in PlayStation Hardware previously sold. In addition, Sony may at
any time change its financial requirements or its warranty or service policies
without incurring any liability to Customer.
15. DEFAULTS: If Customer becomes delinquent in payment obligations or other
credit or financial requirements established by Sony, or if Customer is in
default of any of the terms or conditions hereof or of any agreement with Sony,
or if in the opinion of Sony, Customer's credit becomes impaired, Sony shall
have the following rights and remedies as well as those provided by applicable
law:
(a) Sony may declare all sums immediately due and payable, notwithstanding any
credit terms previously in effect.
(b) Sony may refuse any order placed by Customer.
(c) Sony may cancel any accepted orders or delay shipment of any order.
(d) Sony may require as a condition of continuing to do business with Customer,
that Customer execute a letter of credit, promissory note(s), security
agreement(s), financial statement(s) and such other Instruments as Sony,
in its sole discretion, deems necessary for its protection.
(e) If credit has been previously extended by Sony to Customer, and Sony elects
to make additional sales to Customer, Sony may require payment on a
cash-in-advance basis.
(f) In the event collection of sums due from Customer to Sony is referred to an
attorney or if suit is brought to collect such sums or to enforce rights of
Sony, Customer agrees to pay all costs and reasonable collection or
attorney's fees incurred in any collection suit or appellate proceeding and
in executing on any judgment based on Customer's obligations.
16. NON-EXCLUSIVE SALES: All sales are made to Customers on a non-exclusive
basis. Further, Sony shall have the right, from time to time at its option, to
supply PlayStation Hardware directly to consumers for promotional purposes.
17. LIMITED WARRANTY: The warranty cards enclosed with PlayStation Hardware
state Sony's limited warranty to end users applicable to those elements of the
PlayStation Hardware. If PlayStation Hardware is not accompanied by warranty
cards, Sony's then current warranty applicable to those elements of the
PlayStation Hardware will apply. All repairs to or replacements of PlayStation
Hardware after the expiration of the applicable warranty period will be
Customer's responsibility.
EXCEPT FOR THE FOREGOING WARRANTIES, SONY HEREBY DISCLAIMS AND EXCLUDES ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ANY WARRANTY
WITH REGARD TO ANY CLAIM OF INFRINGEMENT THAT MAY BE PROVIDED IN SECTION
2-312(3) OF THE UNIFORM COMMERCIAL CODE AND/OR IN ANY OTHER COMPARABLE STATE
STATUTE RESPECTING PLAYSTATION HARDWARE IS EXPRESSLY EXCLUDED, SONY HEREBY
DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT PLAYSTATION HARDWARE IS COMPATIBLE
WITH ANY COMBINATION OF NON-SONY PRODUCTS USED IN CONNECTION WITH THE
PLAYSTATION HARDWARE.
18. SPECIAL CONDITIONS OF SALE: Sony reserves the right to refuse to sell
PlayStation Hardware to any Customer that has sold, or is currently selling
promotional, bootleg, or counterfeit PlayStation Hardware or software.
-27- CONFIDENTIAL
28
19. PROOF OF DELIVERY: Sony will accept requests for a proof of delivery (a
"P.O.D.") request up to sixty (60) days after the invoice date. Sony reserves
the right to charge Customers a service charge or handling fee for each P.O.D.
requested by Customer.
20. CERTIFICATION: Customer certifies that it has read the sections entitled
Limited Warranty and Limitation of Liability contained in the License Agreement
and these Terms and Conditions, that they have been explicitly negotiated and
that they have become part of the basis of its bargain with Sony.
-28- CONFIDENTIAL
29
EXHIBIT B
COMPENSATION
1. NONREFUNDABLE PAYMENT - The Nonrefundable Payment [***] shall be [***].
[2. ***
a.
b.
3. ***]
* CONFIDENTIAL TREATMENT REQUESTED
-29- CONFIDENTIAL
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EXHIBIT C
GUIDELINES FOR THIRD PARTY USE OF PLAYSTATION(TM) TRADEMARK & LOGOS
These guidelines are meant to assist third parties in complying with legal
requirements regarding the use of the PlayStation trademark and logos. ALL
PRINTED MATERIALS USING THE PLAYSTATION TRADEMARK AND LOGOS MUST BE SUBMITTED
FOR PRIOR WRITTEN APPROVAL. THE FOLLOWING IS PROVIDED FOR GUIDANCE ONLY.
1. SONY COMPUTER ENTERTAINMENT TRADEMARKS AND LOGOS
a. Third Parties may use the PlayStation and PS logos on compatible
products, documentation and advertising materials.
b. Third Parties may not use the Sony logo or trademark in any
circumstance.
2. TRADEMARK USE
a. Trademarks must always be legible.
b. Trademarks must always be used as adjectives in conjunction with the
product, e.g., for use on your PlayStation game console.
c. Trademarks must not be used in plural (e.g., PlayStations) or
possessive form (e.g., PlayStation's) or as a noun (e.g., the
PlayStation).
d. Trademarks must always be given correct logo treatment, or in text,
the "P" and "S" in PlayStation must be capitalized.
3. TRADEMARK NOTICE SYMBOLS AND CREDIT LINES
a. Use the trademark symbol (TM) unless instructed to use (R). A
trademark symbol should follow all headline and prominent use of
trademarks and logos, and should appear at least once, preferable the
first time used, in any long copy.
Place the trademark symbol on the right shoulder or at the foot of
the trademark or logo.
Example: PlayStation(TM)
b. Credits should state that the product is Licensed by Sony Computer
Entertainment America and that PlayStation and the PlayStation logos
belong to Sony Computer Entertainment Inc.
Example: Licensed by Sony Computer Entertainment America for use
with the PlayStation game console. PlayStation and the
PlayStation logos are trademarks of Sony Computer
Entertainment Inc.
4. MISUSE OF THE PLAYSTATION TRADEMARK AND LOGOS
The PlayStation trademark and logos are valuable property rights. If you
misuse them, you may be in breach of your License Agreement or you may be
liable for trademark infringement, unfair competition or passing off.
Please treat them properly. If you have any questions please contact the
Sony Interactive Entertainment Inc. Legal and Business Affairs department.
-30-
CONFIDENTIAL
31
AMENDMENT #1 TO
SALE AND LICENSE AGREEMENT
Amendment, dated as of February 6, 1997 between Sony Computer Entertainment
America, a division of Sony Computer Entertainment America Inc. (formerly known
as Sony Interactive Entertainment Inc.), with offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Sony") and The Lightspan
Partnership, Inc., with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ ("Licensee") to the Agreement dated as of January 26, 1996 between
Sony and Licensee (the "Agreement").
1. Section 3.4 of the Agreement is hereby amended and restated in its entirety
to read as follows:
"3.4 DEMONSTRATION UNITS OF PLAYSTATION HARDWARE. Sony may, from time to
time at the request of Licensee and subject to Sony's approval, supply Licensee
with units of PlayStation Hardware for demonstration purposes. Any
demonstration units of PlayStation Hardware provided to Licensee by Sony shall
be used by Licensee for demonstration purposes only in order for Licensee to
demonstrate the Licensed Products and PlayStation Hardware to the School Market
on a limited trial basis. Licensee will provide to Sony a written accounting of
the use of these demonstration systems in order to substantiate the
effectiveness of the demonstration units in obtaining sales. All terms and
conditions of this Agreement, including without limitation the terms and
conditions set forth in Exhibit A, shall apply with respect to any
demonstration units."
2. Section 16.7 of the Agreement is hereby amended and restated in its
entirety to read as follows:
"16.7 GOVERNING LAW; CONSENT TO JURISDICTION. This License 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 License 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).
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."
3. Except as specifically amended hereby, the Agreement shall remain in full
force and effect and is hereby ratified and confirmed in all respects. This
Amendment all be governed by and construed in accordance with the laws of the
State of California.
SONY COMPUTER ENTERTAINMENT AMERICA THE LIGHTSPAN PARTNERSHIP, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------- ----------------------------
Name: ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------ --------------------------
Title: VP Title: SVP
----------------------------- -------------------------
Date: 5/8/97 Date: 5/1/97
------------------------------ --------------------------
CONFIDENTIAL
32
AMENDMENT #2 TO
SALE AND LICENSE AGREEMENT
Amendment, dated as of May 28, 1997 between Sony Computer Entertainment America,
a division of Sony Computer Entertainment America Inc. (formerly known as Sony
Interactive Entertainment Inc.), with offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Sony") and The Lightspan Partnership, Inc.,
with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
("Licensee") to the Sale and License Agreement dated as of January 26, 1996
between Sony and Licensee (the "Agreement").
WHEREAS, Sony has licensed to Licensee the right to acquire and distribute
units of the PlayStation Game Console to the School Market pursuant to the
Agreement;
WHEREAS, [***]
WHEREAS, [***]
WHEREAS, [***]
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. CREDIT ON UNITS PURCHASED. Upon full execution of this Amendment, Sony
agrees to credit the amount of [***] to Licensee, [***] Licensee shall use best
efforts to purchase the Forty Thousand (40,000) units of the PlayStation Game
Console subject to the increase set forth above by no later than the end of
this fiscal year, which shall end on March 31, 1998. [***]
[2. ***]
-1-
CONFIDENTIAL
* CONFIDENTIAL TREATMENT REQUESTED
33
3. Except as specifically amended hereby, the Agreement shall remain in full
force and effect and is hereby ratified and confirmed in all respects. This
Amendment shall be governed by and construed in accordance with the laws of the
State of California.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
as of the day and year first written above.
SONY COMPUTER ENTERTAINMENT AMERICA THE LIGHTSPAN PARTNERSHIP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------- ---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------ --------------------------
Title: EVP/COO Title: SVP
----------------------------- -------------------------
Date: 7/21/97 Date: 7/10/97
------------------------------ --------------------------
NOT AN AGREEMENT UNTIL EXECUTED BY BOTH PARTIES
-2-
CONFIDENTIAL
34
THIRD AMENDMENT TO SALE AND LICENSE AGREEMENT
This Third Amendment ("Third Amendment") to the Sale and License Agreement
dated January 26, 1996, as twice amended (the "License Agreement") is entered
into this twenty first day of December, 1998, by and between Sony Computer
Entertainment America Inc. ("Sony") and The Lightspan Partnership, Inc.
("Licensee").
1. All definitions contained in the License Agreement shall be
incorporated herein.
2. Section 1.10 shall be deleted and replaced with:
1.10 "PlayStation Hardware" means the finished hardware components to
be provided to Licensee by Sony, including (i) the PlayStation Game
Console and all peripherals and accessories customarily packaged
therewith (the "PlayStation Console"), (ii) the [***] and (iii) the
Peripherals.
3. Section 1.12 shall be added as follows:
1.12 [***]
4. Section 1.13 shall be added as follows:
1.13 "Peripherals" shall mean those PlayStation console accessories
(e.g. memory cards) that are customarily sold separately by Sony.
5. Section 1.14 shall be added as follows:
1.14 "Lightspan PlayStation Licenses" shall mean the PlayStation
software licenses that have been and are currently marketed and
distributed by Licensee to the School Market.
6. Section 3.1 shall be amended to exclude any [***]
7. Section 3.1.1 shall be added as follows:
3.1.1 Sony may sell the [***] to Licensee; Licensee's purchase of
the [***] shall be governed by Exhibit A and the terms and conditions of this
Agreement. Licensee acknowledges and agrees that (i) Sony's development and
manufacturing of the [***] is experimental, (ii) notwithstanding anything else
contained in this Agreement, Sony makes no representations or warranties with
respect to the [***] and (iii) Sony may discontinue the manufacture and sale to
Licensee of [***] at any time, without notice, in Sony's sole discretion.
8. Sections 3.3 and 3.4 shall be amended to exclude the [***]
9. Section 4.1 shall be amended to exclude the [***]
* CONFIDENTIAL TREATMENT REQUESTED
35
THIRD AMENDMENT TO SALE AND LICENSE AGREEMENT
DECEMBER 21, 1998
PAGE 2
10. Section 4.1.1 shall be added as follows:
4.1.1 The purchase price for the Communications Devices and
Peripherals shall be determined by Sony and are subject to change
without notice. All payments to Sony for the Communications Devices
and Peripherals shall be made in United States currency drawn on a
United States bank, unless otherwise specified between the parties.
11. Each reference to "PLAYSTATION GAME CONSOLE" in section 10.4.2 of the
License Agreement shall be hereby amended to read "PLAYSTATION HARDWARE."
12. Exhibit B shall be amended as follows:
1. The Nonrefundable Payment for units [***] shall be calculated
per the method of calculation set forth in this Exhibit B
and the Second Amendment to the License Agreement--less [***]
2. Not amended.
3. Not amended.
[4. ***]
[The remainder of this page left intentionally blank]
* CONFIDENTIAL TREATMENT REQUESTED
36
THIRD AMENDMENT TO SALE AND LICENSE AGREEMENT
DECEMBER 21, 1998
PAGE 3
13. Except as are expressly amended herein, all terms and conditions of
the License Agreement shall remain in full force and effect, and are hereby
ratified by the parties hereto.
THE LIGHTSPAN PARTNERSHIP INC. SONY COMPUTER ENTERTAINMENT AMERICA INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------ -----------------------
(Name) ▇▇▇ ▇▇▇▇▇▇ (Name) ▇▇▇▇▇ ▇▇▇▇▇
(Title) Senior VP (Title) EVP/COO
(Date) 1/4/99 (Date) 1/14/99
[Neither an offer nor an agreement until executed by both parties hereto]
37
FOURTH AMENDMENT TO SALE AND LICENSE AGREEMENT
This Fourth Amendment (the "Fourth Amendment") to Sale and License
Agreement, as previously amended, (the "Agreement") is entered into this twenty
fifth day of May, 1999, to be effective the 26th day of January, 2000 (the
"Effective Date"), by and between Sony Computer Entertainment America, Inc.
(hereinafter "SCEA"), and The Lightspan Partnership, Inc. ("Licensee").
RECITALS
WHEREAS, SCEA and Licensee entered into the Agreement dated January 26,
1996, as subsequently amended; and
WHEREAS, SCEA and Licensee wish to extend the Agreement, as modified below.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for good and valuable consideration received, beginning on the Effective
Date the parties hereto agree as follows:
1. REFERENCES. All references in the Agreement to Sony Computer
Entertainment America as "Sony" shall be changed to "SCEA".
2. EXTENSION OF TERM. The Term of the Agreement is hereby extended for a
term of two (2) years until January 26, 2002 and shall renew automatically for
one (1) year periods unless and until terminated by either party upon ninety
(90) days written notice.
3. NOTICES. Section 2 of the Term Schedule shall be revised as follows:
Sony Computer Entertainment America The Lightspan Partnership, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: With a copy to:
Sony Computer Entertainment America ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇. Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal & Business Affairs
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
4. RATIFICATION. Except as is expressly modified or supplemented herein,
SCEA and Licensee hereby confirm and ratify the Agreement as though fully set
forth herein.
SONY COMPUTER ENTERTAINMENT AMERICA, INC. THE LIGHTSPAN PARTNERSHIP, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------- -------------------------------
(Name) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Name) ▇▇▇▇ ▇▇▇▇▇▇
(Title) VP of Business & Technology (Title) President
(Date) 6/14/99 (Date) 6/10/99
[Neither an offer nor an agreement until executed by both parties hereto]
38
[SONY COMPUTER ENTERTAINMENT LETTERHEAD]
August 10, 1999
VIA FACSIMILE ONLY
▇▇▇▇▇▇ ▇▇▇▇▇▇
Lightspan Partnership, Inc., The
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Modification of Territory in License Agreement
Dear ▇▇. ▇▇▇▇▇▇:
SCEA is pleased to advise you that, effective immediately, your Licensed
Territory per the License Agreement shall be expanded to include the Republic
of Mexico, under the express condition that all Licensed Products -- whether
sold in the US, Canada or, now, in Mexico -- comply with all applicable laws
and regulations (see, License Agreement).
SCEA will review and approve all printed materials for Mexico per our
normal procedures, however the Licensed Publisher is responsible for the
accuracy of any text translation. In the event that SCEA makes any changes to
our standard packaging guidelines to reflect local language issues it will be
communicated through an amendment to the Source Book in due course.
We regret that we cannot, at this time, expand your territory to include
any other countries in Central or South America. When we can do so, we will
advise you promptly in writing.
Please contact ▇▇▇▇ ▇▇▇▇▇▇ if you have any questions regarding this.
Very truly yours,
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
VP 3rd Party
cc: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇