CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT
CONFIDENTIAL TREATMENT REQUESTED. INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND MARKED WITH "[***]". AN UNREDACTED VERSION OF THE DOCUMENT HAS ALSO BEEN FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION AS REQUIRED BY RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit 10.3
CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT
This Confidential Settlement and Patent License Agreement, by and between Xxxxxx & Xxxxx, Inc., a Delaware corporation having a principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (“Barnes&Noble”), and xxxxxxxxxxxxxx.xxx llc, a Delaware limited liability corporation having a principal place of business at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Microsoft Corporation, a Washington corporation having a primary place of business at Xxx Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxx 00000 (“MICROSOFT”), and Microsoft Corporation’s Subsidiary, Microsoft Licensing GP, a Nevada general partnership, with offices at 0000 Xxxx Xxxx, Xxxxx 000, Xxxx XX 00000-000 (“MLGP”), is effective as of April 27, 2012 (“Effective Date”). MICROSOFT and Barnes&Noble (individually, a “Party”; collectively, the “Parties”) agree as follows.
Section 1. Definitions
“Affiliate” means, for any given entity at any relevant time, any other entity Controlling, Controlled by or under common Control with such given entity.
“Commercial Agreement” means the Commercial Agreement dated as of the date hereof between MICROSOFT, Barnes&Noble and NewCo.
“Consumer Device Business” means substantially the entirety of Barnes&Noble’s business of the Sale of Covered Products, but not including the sale of Covered Products in retail stores.
“Control” means direct or indirect (i) ownership of more than fifty percent (50%) of the outstanding shares representing the right to vote for members of the board of directors or other managing officers of an entity, or (ii) for an entity that does not have outstanding shares, more than fifty percent (50%) of the ownership interest representing the right to make decisions for such entity.
“Covenant” means the covenant granted by MICROSOFT under Section 3.2 of this Agreement.
“Covenanted Supplier” means an entity that (i) manufactures a Covered Product or any component thereof for or on behalf of Barnes&Noble or its Affiliates or (ii) directly or indirectly supplies such Covered Product or any component thereof to Barnes&Noble or its Affiliates, at any time during the Term. For the avoidance of doubt, Covenanted Supplier does not include Barnes&Noble or its Affiliates.
“Covered Patents” means all Patents owned by MICROSOFT or its Affiliates entitled to an effective filing date on or before the end of the Term.
“Covered Products” means any and all eReaders and Other Consumer Devices that are Sold by Barnes&Noble or its Affiliates. Notwithstanding the foregoing, Covered Products do not include any portions of the foregoing that are (a) GPLv3 Software, (b) Third Party Software, (c) Metro UI Functionality, (d) Virtual Reality Functionality, (e) Gestured-Based Functionality, or (f) IW Software.
“Customer” means a Distributor or end user of a Covered Product.
“Device Fee” means the fees set forth below for each unit of a Covered Product in the specified Transfer Price range:
Transfer Price
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eReader
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Other Consumer Device
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[***]
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[***]
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[***]
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“Display” means any kind of display or monitor, including a single display or multiple integrated displays that are capable of being used together to present a unified image.
“Distributors” means resellers and distributors of Barnes&Noble to the extent they are authorized by Barnes&Noble (directly or indirectly) to resell, license, supply, distribute or otherwise make available Covered Products.
“Excluded Technologies” means [***].
“eReader” means a device that (A) is not a General Purpose Computing Device, (B) has the primary purpose of reading digital books, periodicals and other publications, (C) does not include functionality for displaying dynamic web pages, and (D) has only an integrated e-ink technology Display. eReaders include, for example, versions of the NOOK Simple Touch available as of the Effective Date. For the avoidance of doubt, a device that includes any Display technology other than e-ink Display technology is not an eReader.
“General Purpose Computing Device” means any general purpose computing device (e.g. server product, personal computer, desktop, laptop, netbook, slate or tablet), including any device that is designed as, marketed as, or capable (through docking or otherwise) of performing the functions of, such general purpose computing devices, and any replacement for any of the foregoing. General Purpose Computing Devices include, for example, versions of the NOOK Tablet available as of the Effective Date.
“[***]-Based Functionality” means (i) a system that includes [***] for the purpose of [***], (ii) logic (whether hardware, software or a combination thereof) for the foregoing system [***], or combinations of (i) and (ii). For clarification, “[***]-Based Functionality” does not include software or hardware that [***].
[***]
“[***] Software” means software, products or services that provide [***] functionality [***], whether provided as software or a service), as well as any [***] functionality associated with the foregoing. Notwithstanding the foregoing, [***] Software does not include [***].
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“Keyboard” means any kind of keyboard or keypad, including touch screen, projected and other types of mechanical and non-mechanical keyboards.
“License” means the license granted by MICROSOFT to Barnes&Noble under Section 3.1 of this Agreement.
“[***] Functionality” means functionality that (i) associates [***] displays [***] or (ii) [***] and displays [***].
“NewCo” means an existing or newly formed Affiliate of Barnes&Noble to which Barnes&Noble assigns the Consumer Device Business, consistent with the Separation.
“Other Consumer Device” means [***].
“Patents” means any and all patents, letters patents, utility models, patent registrations, equivalent rights, applications, provisional applications and non-provisional applications in all countries of the world, including all continuations, continuations-in-part, divisionals, substitute applications, reissues, reexaminations, renewals and extensions, and all related patents and applications claiming priority from such patents, letters patents, utility models, patent registrations, equivalent rights, applications, provisional applications and non-provisional applications. Patents do not include design patents, design registrations or trade dress rights.
“Pre-Installed Software” means [***].
“Quarter” means each calendar quarter (January 1 through March 31, April 1 through June 30, July 1 through September 30, and October 1 through December 31).
“Royalty Period” means each Quarter during the Term, except (i) the first Royalty Period shall commence on the earlier of (A) the commercial release of a NOOK Metro style application for Windows 8 pursuant to the Commercial Agreement, or (B) December 31, 2012, (the earlier of (A) or (B), the “Start Date”) and (ii) the last Royalty Period shall end on the last day of the Term.
“Separation” means the assignment to NewCo of the Consumer Device Business, consistent with the separation principles approved by the Board of Directors of Barnes&Noble and provided to MICROSOFT on April 11, 2012.
“Subsidiary” means an Affiliate Controlled by Barnes&Noble.
“Third Party Software” means [***].
“Transfer Price” means the average selling price during the Royalty Period that is charged by Barnes&Noble and its Affiliates in an arms-length transaction for a given brand and model of a Covered Product entering their distribution channel; provided, however, in no event shall the Transfer Price be less than the costs incurred by the manufacturer for buying or creating the components that comprise the Covered Product.
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“[***] Functionality” means (i) a [***] system with one or more [***] that are able to [***]; (ii) software that [***]; or (iii) any combination of (i) and (ii), or portions thereof, wherein the primary function of the foregoing (i), (ii) or (iii) is to [***].
“Windows Product” means a Covered Product that runs solely on a Windows Operating System licensed separately by MICROSOFT to Barnes&Noble or its Affiliates.
Section 2. Releases
2.1 Subject to Section 3.5 and Dismissal under Section 3.6, MICROSOFT, on behalf of itself and its current and future Affiliates, hereby releases and forever discharges Barnes&Noble, its past and current Affiliates and their respective employees, officers, directors, principals, Covenanted Suppliers and Customers, acting as such, from any and all claims, actions, causes of action, suits, damages, injuries, duties, rights, obligations, liabilities, adjustments, responsibilities, judgments, trespasses, and demands, whatsoever, in law or in equity, whether known or unknown, suspected to exist or unsuspected to exist, which were made or could have been made by MICROSOFT alleging infringement (whether direct infringement, contributory infringement or induced infringement) of the Covered Patents based upon (1) the manufacture, use, importation, or sale by Barnes&Noble or its current and past Affiliates of any Covered Products sold by Barnes&Noble or its current or past Affiliates at any time prior to the Effective Date, or (2) the manufacture, use, importation or sale by Covenanted Suppliers, on behalf of Barnes&Noble or its current or past Affiliates of any Covered Products or any component thereof sold by Barnes&Noble or its current or past Affiliates at any time prior to the Effective Date.For purposes of Sections 3.1 and 3.2, any activity (including but not limited to making, having made, using, importation, offering for sale or sale) of Xxxxxx & Xxxxx, its current or past Affiliates or its Covenanted Suppliers, with respect to a unit of a Covered Product sold during the Term (or any component thereof), shall be deemed to have been performed during the Term.
2.2 Subject to Section 3.5 and Dismissal under Section 3.6, MICROSOFT and Barnes&Noble, on behalf of themselves and their current and future Affiliates, hereby release and forever discharge each other and their past and current Affiliates, and their respective employees, officers, directors, and principals, acting as such, from all claims, counterclaims, defenses, actions, causes of action, suits, damages, injuries, duties, rights, obligations, liabilities, adjustments, responsibilities, judgments, trespasses, and demands, whatsoever, in law or in equity, whether known or unknown, suspected to exist or unsuspected to exist, which were made or could have been made, of any kind or nature arising from or relating in any way to the actions alleged in the Litigations occurring before the Effective Date.
2.3 The Parties and their Affiliates expressly waive all rights under any statutes (such as, for example, California Civil Code § 1542), legal decisions, or common law principles providing that releases of the type extended in Sections 2.1 and 2.2 do not or may not extend to claims which are unknown, unanticipated, or unsuspected at the time such releases are executed.
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3.4 Defensive Termination Rights. [***]
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3.6.1 The Parties agree that they and their Affiliates shall bear their own costs and attorneys’ fees relating to the Litigations, their dismissals and the negotiation of this Agreement.
Section 4. Payments
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(a) If MICROSOFT fails to pay any undisputed payment when due under the Commercial Agreement, then Barnes&Noble may withhold and defer payment of any and all amounts otherwise due or becoming due to MICROSOFT under this Agreement until such amount is paid in full to Barnes&Noble, and Barnes&Noble will give MICROSOFT written notice of such deferral; provided that the amount subject to deferral shall not exceed the amount that MICROSOFT has failed to pay under the Commercial Agreement; and
(b) If MICROSOFT or Barnes&Noble provides written notice of a dispute to the other Party regarding any payment obligation of MICROSOFT under the Commercial Agreement, then, unless otherwise agreed by the parties:
(i) those Parties will promptly submit the dispute to expedited arbitration under the Commercial Agreement;
(ii) Barnes&Noble may withhold and defer payment of any and all amounts otherwise becoming due to MICROSOFT under this Agreement beginning after a determination, by final order in such expedited arbitration or by agreement of the parties, that all or any portion of a disputed payment obligation is in fact due by MICROSOFT; provided that the amount subject to deferral shall not exceed the amount that MICROSOFT has failed to pay under the Commercial Agreement; and
(iii) Barnes&Noble may continue to withhold and defer such payment until satisfaction in full of such payment obligation by MICROSOFT.
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Section 5. Term and Termination
5.2.1. Either Party may immediately terminate the Agreement by giving the other Party written notice of termination in the event that:
(a)
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the other Party commits any material breach of this Agreement and fails to cure such breach within thirty (30) days after receipt of written notice of such breach;
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(b)
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the other Party or any of its Affiliates commences, directs or controls any legal action seeking to render any claim of any Patent of the Party or its Affiliates invalid or unenforceable;
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(c)
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the other Party or any of its Affiliates brings a claim of patent infringement against the Party its Affiliates or their customers on account of any software, product or service of a Party or its Affiliates;
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(d)
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Dismissal pursuant to Section 3.6 is not granted; or
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(e)
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the Commercial Agreement is terminated in accordance with its terms other than for Material Default by NewCo.
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Section 6. Representations, Warranties and Liabilities
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6.3 DISCLAIMER OF WARRANTIES. MICROSOFT DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR SUITABILITY FOR ITS INTENDED PURPOSE. FURTHER, MICROSOFT HAS NOT MADE, AND DOES NOT MAKE, ANY REPRESENTATION OR WARRANTY: WITH REGARD TO THE SCOPE, COVERAGE, VALIDITY OR ENFORCEABILITY OF ANY OF THE COVERED PATENTS; THAT THE COVERED PATENTS APPLY WORLDWIDE; OR THAT ANY COVERED PRODUCT MADE, USED, SOLD, OFFERED FOR SALE OR IMPORTED UNDER THE LICENSE OR COVENANT IS OR WILL BE FREE FROM INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY.
Section 7. Miscellaneous
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Any notices to Barnes&Noble shall be addressed to:
Xxxxxx & Xxxxx, Inc.
Attn: General Counsel
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Any notices to MICROSOFT shall be addressed to:
Microsoft Licensing GP
Attn: Special Agreements
Dept. 551, Volume Licensing
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
Facsimile No.: 775-823-5600
With a copy to:
Microsoft Corporation
Attn: Corporate Vice President, Intellectual Property & Licensing Group
Legal and Corporate Affairs
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Facsimile No.: 000-000-0000 (Attn: IPLG)
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7.5 Jurisdiction and Governing Law. This Agreement and all disputes arising out of or related to this Agreement shall be governed by the laws of the State of New York, without reference to conflict of laws principles. Except as set forth in Section 4.6, any and all claims, lawsuits or disputes of any kind between the Parties arising out of or relating to this Agreement shall be resolved in federal or state courts in the State of New York within the Southern District of New York. The Parties hereby waive any challenge to the jurisdiction or venue of such courts over such claims, lawsuits or disputes.
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(a) If Barnes&Noble or its Consumer Device Business (“Acquired Entity”) is Acquired directly or indirectly by a third party (“Acquiring Third Party”), then each of the following subsections shall apply.
(i) Barnes&Noble shall promptly give notice of such Acquisition to MICROSOFT.
(ii) Such Acquisition shall not affect any releases, warranties, representations or other rights granted by Barnes&Noble or its Affiliates to MICROSOFT, its Affiliates or their customers.
(iii) The releases granted to Barnes&Noble and its Affiliates in Section 2 shall survive as to Covered Products of the Acquired Entity and its Then-Existing Affiliates, but no releases, licenses or covenants shall extend to any software, products or services of the Acquiring Third Party or any of its Affiliates.
(iv) Section 5.2.1(c) shall be automatically deleted from this Agreement and shall no longer apply.
(v) [***]
(vi) MICROSOFT shall have the right to terminate this Agreement at any point after the Acquisition (or any subsequent Acquisition) by providing written notice of termination to the Acquiring Third Party with such termination being effective one hundred eighty (180) days after receipt by Barnes&Noble of such notice.
(b) An “Acquisition” means any transaction or series of related transactions involving Barnes&Noble or the Consumer Device Business resulting in (i) a person or entity acquiring, directly or indirectly, beneficial ownership of securities thereof having more than 50% of the total voting power for the election of directors or other managing authority of Barnes&Noble or the Consumer Device Business, respectively, after such transaction(s), (ii) a liquidation or reorganization of Barnes&Noble or the Consumer Device Business, or (iii) an entity or entities or person or persons which did not direct the management and operations of Barnes&Noble or the Consumer Device Business before such transaction(s) otherwise acquiring the right to direct the management and operations of Barnes&Noble or the Consumer Device Business, respectively, after such transaction(s). If Barnes&Noble or the Consumer Device Business is the subject of any of the foregoing transactions, then it is deemed “Acquired”. “Then-Existing Affiliates” means Affiliates of Barnes&Noble before such Acquisition.
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Microsoft Corporation
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By: | /s/ Xxxxxx X. Xxxxxxx |
Name: | Xxxxxx X. Xxxxxxx |
Title: | Chief Executive Officer |
Date Signed: |
4/27/2012
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[Signature Page to the Patent License Agreement]
Microsoft Licensing GP
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By: | /s/ Xxxx Xxxxxx |
Name: | Xxxx Xxxxxx |
Title: | General Manager |
Date Signed: |
4/27/2012
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[Signature Page to the Patent License Agreement]
xxxxxxxxxxxxxx.xxx llc
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By: | /s/ Xxxxxx X. XxXxxxxx |
Name: |
Xxxxxx X. XxXxxxxx
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Title: | Vice President, General Counsel & Secretary |
Date Signed: |
4/27/2012
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[Signature Page to the Patent License Agreement]
Xxxxxx & Xxxxx, Inc.
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By: | /s/ Xxxxxx X. XxXxxxxx |
Name: |
Xxxxxx X. XxXxxxxx
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Title: | Vice President, General Counsel & Secretary |
Date Signed: |
4/27/2012
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[Signature Page to the Patent License Agreement]
CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT
EXHIBIT A
ROYALTY REPORT
Microsoft Licensing GP – IP&L Report
Licensee: Xxxxxx & Noble, Inc.
Agreement Number: ________________________________________
Report for the Royalty Period Beginning/Ending: _________________________________________
Send completed form to xxxxxxxx@xxxxxxxxx.xxx
Covered
Products
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Category of
Covered
Products
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Royalty-
Bearing Units
Sold this
Royalty Period
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Transfer
Price
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Device Fee
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Royalties
(Units x Device Fee)
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[Brand/Model No. 1]
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[Brand/Model No. 2]
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|||||
[Make additional rows for other Covered Products, as needed.]
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TOTAL AMOUNT DUE: $ ____________
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The undersigned, by signing his/her name below, hereby certifies that he/she is duly authorized by Licensee to complete this Royalty Report, that the title listed below is his/her true and correct title, that this report is complete and correct, and that Licensee is in compliance with the Royalty Report reporting requirements of the Agreement.
Signature
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Printed Name
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Title
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Date
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CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT
EXHIBIT B
JOINT PRESS RELEASE
Xxxxxx & Xxxxx and Microsoft Form Strategic Partnership to
Advance World-Class Digital Reading Experiences for Consumers
Newly Formed Subsidiary to Include NOOK® Digital and College Businesses
New York, NY and Redmond, WA (April 30, 2012) – Xxxxxx & Noble Inc. (NYSE: BKS) and Microsoft (NASDAQ: MSFT) today announced the formation of a strategic partnership in a new Xxxxxx & Xxxxx subsidiary, which will build upon the history of strong innovation in digital reading technologies from both companies. The partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content.
The new subsidiary, referred to in this release as Newco, will bring together the digital and College businesses of Xxxxxx & Noble. Microsoft will make a $300 million investment in Newco at a post-money valuation of $1.7 billion in exchange for an approximately 17.6% equity stake. Xxxxxx & Xxxxx will own approximately 82.4% of the new subsidiary, which will have an ongoing relationship with the company’s retail stores. Xxxxxx & Noble has not yet decided on the name of Newco.
One of the first benefits for customers will be a NOOK application for Windows 8, which will extend the reach of Xxxxxx & Xxxxx’x digital bookstore by providing one of the world’s largest digital catalogues of e-Books, magazines and newspapers to hundreds of millions of Windows customers in the U.S. and internationally.
The inclusion of Xxxxxx & Noble’s College business is an important component of Newco’s strategic vision. Through the newly formed Newco, Xxxxxx & Noble’s industry leading NOOK Study software will provide students and educators the preeminent technology platform for the distribution and management of digital education materials in the market.
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“The formation of Newco and our relationship with Microsoft are important parts of our strategy to capitalize on the rapid growth of the NOOK business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments,” said Xxxxxxx Xxxxx, CEO of Xxxxxx & Xxxxx. “Microsoft’s investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business.”
“The shift to digital is putting the world's libraries and newsstands in the palm of every person's hand, and is the beginning of a journey that will impact how people read, interact with and enjoy new forms of content,” said Xxxx Xxxx, President at Microsoft. “Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re on the cusp of a revolution in reading.”
Xxxxxx & Xxxxx and Microsoft have settled their patent litigation, and moving forward, Xxxxxx & Noble and Newco will have a royalty-bearing license under Microsoft’s patents for its NOOK eReader and Tablet products. This paves the way for both companies to collaborate and reach a broader set of customers.
NewCo
On January 5, Xxxxxx & Xxxxx announced that it was exploring the strategic separation of its digital business in order to maximize shareholder value. Xxxxxx & Noble is actively engaged in the formation of Newco, which will include Xxxxxx & Xxxxx'x digital and College businesses. The company intends to explore all alternatives for how a strategic separation of Newco may occur. There can be no assurance that the review will result in a strategic separation or the creation of a stand-alone public company, and there is no set timetable for this review. Xxxxxx & Noble does not intend to comment further regarding the review unless and until a decision is made.
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Additional information will be contained in a Current Report on Form 8-K to be filed by Xxxxxx & Xxxxx.
Xxxxxx & Xxxxx and Microsoft will host an investor call and webcast beginning at 8:30 A.M. ET on Monday, April 30, 2012. To join the webcast, please visit: xxx.xxxxxxxxxxxxxxxxx.xxx/xxxxxxxx.
Media Contacts
For Xxxxxx & Noble:
Xxxx Xxxxx Xxxxxxx
Senior Vice President
Corporate Communications
Xxxxxx & Noble, Inc.
(000) 000-0000
xxxxxxxx@xx.xxx
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For Microsoft:
Rapid Response Team
Xxxxxxxx Xxxxxxx Worldwide
(000) 000-0000
xxx@xxxxxxxxxxxxxxx.xxx
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Investor Contact
For Xxxxxx & Noble:
Xxxx Xxxxxxx
Director of Investor Relations
Xxxxxx & Noble, Inc.
(000) 000-0000
xxxxxxxx@xx.xxx
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About Xxxxxx & Xxxxx, Inc.
Xxxxxx & Noble, Inc. (NYSE:BKS), the world’s largest bookseller and a Fortune 500 company, operates 691 bookstores in 50 states. Xxxxxx & Xxxxx College Booksellers, LLC, a wholly-owned subsidiary of Xxxxxx & Noble, also operates 641 college bookstores serving over 4.6 million students and faculty members at colleges and universities across the United States. Xxxxxx & Xxxxx conducts its online business through XX.xxx (xxx.xx.xxx), one of the Web’s largest e-commerce sites, which also features more than two million titles in its NOOK Bookstore™ (xxx.xx.xxx/xxxxxx). Through Xxxxxx & Noble’s NOOK™ eReading product offering, customers can buy and read digital books and content on the widest range of platforms, including NOOK devices, partner company products, and the most popular mobile and computing devices using free NOOK software. Xxxxxx & Xxxxx is proud to be named a X.X. Power and Associated 2012 Customer Service Champion and is only one of 50 U.S. companies so named.
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General information on Xxxxxx & Xxxxx, Inc. can be obtained via the Internet by visiting the company’s corporate website: xxx.xxxxxxxxxxxxxxxxx.xxx.
NOOK®, NOOK Tablet™, NOOK Simple Touch with GlowLight™ , NOOK Simple Touch ™, NOOK Color™, Reader’s Tablet™, Best-Text™, NOOK Store™, NOOK Bookstore™, NOOK Magazines™, VividView™, NOOK Newspapers™, FREE NOOK Reading Apps™, NOOK Kids™, NOOK Digital Shop™, Read In Store™, More In Store™, LendMe®, NOOK Library™, NOOK Books en español™, NOOK Study™, Lifetime Library™ and Read What You Love. Anywhere You Like™ are trademarks of Xxxxxx & Noble, Inc. Other trademarks referenced in this release are the property of their respective owners.
Follow Xxxxxx & Xxxxx on Twitter (xxx.xx.xxx/xxxxxxx), Facebook (xxxx://xxx.xxxxxxxx.xxx/xxxxxxxxxxxxxx) and YouTube (xxxx://xxx.xxxxxxx.xxx/xxxx/xxxxxxxx).
About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.
This press release contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information that are based on the beliefs of the management of Microsoft or Xxxxxx & Noble, as applicable, as well as assumptions made by and information currently available to such management. When used in this press release, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will” and similar expressions, as they relate to Xxxxxx & Xxxxx, Newco or Microsoft or the management of Xxxxxx & Noble or Microsoft, identify forward-looking statements.
Such statements reflect the current views of the relevant entities with respect to future events, the outcome of which is subject to certain risks, including, among others, the risk that the transactions contemplated by this press release, including with respect to any spin-off, split-off or other disposition by Xxxxxx & Xxxxx of its interest in Newco, are not able to be implemented on the terms described or at all, the risk that the transactions do not achieve the expected benefits for the parties including the risk that Newco’s applications are not commercially successful or that the expected distribution of those applications is not achieved, the risk that the separation of the digital and college businesses or any subsequent spin-off, split-off or other disposition by Xxxxxx & Noble of its interest in Newco results in adverse impacts on Xxxxxx & Xxxxx or Newco (including as a result of termination of agreements and other adverse impacts), the potential impact on Xxxxxx & Noble’s retail business of the separation, the risk that the international expansion contemplated by the relationship is not successful, the potential tax consequences for Xxxxxx & Xxxxx and its shareholders of a subsequent spin-off, split-off or other disposition by Xxxxxx & Noble of its interest in Newco and the risk that Newco is not able to perform its obligations under the commercial agreement, including with respect to the development of applications and international expansion, and the consequences thereof and general risks related to the businesses that will become part of Newco, including those risks discussed in detail in Item 1A, “Risk Factors,” in Xxxxxx & Xxxxx’x Annual Report on Form 10-K and Form 10-K/A, and in Xxxxxx & Noble’s other filings made hereafter from time to time with the SEC.
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Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to Xxxxxx & Xxxxx or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. The parties undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this communication.
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CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT
EXHIBIT C
C-1 Good Faith Negotiations. In the event of a Royalty Dispute, a Party may initiate this process by providing written notice to the other Party. Within 20 calendar days of the date such notice is received by the other Party, the Parties will discuss in good faith to resolve such dispute. If the dispute is not resolved through such discussion, each party will within 20 days deliver to the other party a detailed memorandum setting forth its positions and the contractual and factual analysis therefor. Within 20 calendar days following exchange of such memoranda, the parties will meet again in an attempt to resolve their disagreements. Thereafter either party may serve a notice of arbitration.
C-2 Submission to Arbitration. If the parties are unable to resolve any Royalty Dispute pursuant to Section C-1, the parties agree to exclusively settle such dispute by binding arbitration administered by JAMS in accordance with its Comprehensive Arbitration Rules and Procedures (“JAMS Rules”) and the Expedited Procedures set out in Section 16.2 thereof, subject to the provisions of this Exhibit C, to be held in San Francisco, California.
C-3 Selection of Arbitrator. The arbitration will be held before one (1) neutral arbitrator selected in accordance with the JAMS Rules, or as otherwise agreed by the parties. The arbitrator will not be a current or former employee, agent, consultant or representative of any party or any of its Affiliates.
C-4 Schedule and Discovery. Discovery will be conducted pursuant to the Expedited Procedures set out in Rule 16.2 of the JAMS Rules, further provided that:
(a) The parties shall agree to shortened periods for discovery and commencement of the hearing, and in all respects will use good faith efforts to expedite a ruling on the dispute as quickly as possible.
(b) The parties will complete an informal exchange of non-privileged documents they believe are or may be material to the dispute, and the names of their own witnesses they intend to call in the arbitration, within 14 calendar days after the service of a notice of arbitration.
(c) Any further discovery of documents authorized by the arbitrator shall be strictly limited to that which is likely to be material to the outcome as agreed upon by the parties or, failing such agreement, as determined by the arbitrator.
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(d) The Arbitrator may require a party to provide information to assist in the identification of appropriate custodians for purposes of a search for responsive electronic documents.
(e) Each party shall in no event be entitled to more than three discovery depositions.
(f) The results of any audit pursuant to Section 4.1.3, or of any internal audit conducted by or on behalf of Barnes&Noble or MICROSOFT, shall be admissible in the arbitration.
(h) Each party will be entitled to designate up to two in-house attorneys who shall be entitled to have access to confidential information produced by the opposing party subject to reasonable confidentiality provisions to prevent disclosure to party employees not entitled to such access, which confidentiality provisions shall be enforceable against such in-house attorneys however, such access would not extend to source code. The inclusion of this provision relating to access to confidential information by in-house counsel in this Exhibit C Expedited Arbitration agreement but not in the accompanying Settlement and Patent License Agreement shall not result in or be relied on as supporting any implication that similar access to confidential information by designated in-house counsel would or would not be appropriate in connection with the litigation of a dispute under the Patent License Agreement that is not covered by this Exhibit C.
C-5 Decision. Any arbitration decision will be final and binding on the parties, and will not be subject to any appeal or proceeding to vacate, except on the grounds set forth in the Federal Arbitration Act, 9 U.S.C. 1 et seq. The award rendered by the arbitrators may be entered into any court having jurisdiction, or application may be made to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Such court proceeding will disclose only the minimum amount of information concerning the arbitration as is required to obtain such acceptance or order.
C-6 Costs. The arbitrators’ fees and the administrative expenses of the arbitration will be paid equally by the parties, and each party will pay its own costs and expenses (including attorneys’ fees) in connection with the arbitration.
C-7 Confidentiality of Proceeding. Except as required by law, no party or the arbitrator may disclose the existence, content or results of the arbitration. The dispute resolution set forth in this Section will supersede any other dispute resolution provisions in this Agreement with respect to Royalty Disputes described in Section C-1, except that before initiating dispute resolution under this Section C, the parties will first comply with Formal Escalation (as defined in Exhibit B of the Commercial Agreement).
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