EXHIBIT 10.7
A REQUEST FOR CONFIDENTIAL TREATMENT HAS BEEN FILED WITH THE COMMISSION
WITH RESPECT TO PORTIONS OF THIS EXHIBIT AND SUCH PORTIONS HAVE THEREFORE BEEN
OMITTED, AS INDICATED BY A BRACKETED ASTERISK [*], AND FILED SEPARATELY
WITH THE COMMISSION.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "AGREEMENT") is entered into as of June 18, 1998 by
and between DISNEY ENTERPRISES, INC., a Delaware corporation ("LICENSOR") that
is a wholly-owned subsidiary of THE XXXX DISNEY COMPANY, a Delaware corporation
("TWDC") and INFOSEEK CORPORATION, a California corporation ("LICENSEE");
provided that this Agreement shall only become effective upon the Effective
Time, as defined in and pursuant to that certain Agreement and Plan of
Reorganization, of even date herewith, by and among Licensee, Infoseek
Corporation, a Delaware corporation, Starwave Corporation., a Washington
corporation, and Licensor, and shall cease and be of no further force and effect
in the event that the Effective Time does not occur; and each of the parties
hereto agrees not to terminate, amend or otherwise alter this Agreement or waive
any of its rights hereunder at any time prior to immediately following the
Effective Time.
RECITALS
1. Pursuant to an agreement and plan of reorganization and merger and a stock
and warrant purchase agreement, each dated as of the date hereof (collectively,
the "ACQUISITION AGREEMENTS," Licensor and TWDC agreed to acquire approximately
a 43% interest in the outstanding voting equity of Licensee, subject to the
terms and conditions set forth in the Acquisition Agreements."
2. In connection with the execution of the Acquisition Agreements, Licensee
desires to develop the Portal Products (as defined below) and license the
Licensor Properties (as defined below) for use in and associated with the Portal
Products and Licensor desires to license the Licensor Properties for such uses,
on the terms and conditions specified herein.
3. Pursuant to a product management agreement, dated as of the date hereof
(the "PRODUCT MANAGEMENT AGREEMENT"), Licensor and Licensee agreed to a
mechanism for the management and governance of the Portal Products.
4. In the event of a termination of this Agreement in accordance with its
terms, Licensee has agreed to license to Licensor, and Licensor agrees to
license from Licensee, the Licensee Technology (as defined below) for the
purposes set forth below.
NOW, THEREFORE, in consideration of the agreements set forth herein, the parties
hereto agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the indicated
meanings:
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1.1. "ADVISORY COMMITTEE" means the committee currently comprised of the
Licensor Representative and the Licensee Representative, as set forth in the
Product Management Agreement.
1.2. "AFFILIATE" means with respect to any person, any person directly or
indirectly through one or more intermediaries controlling, controlled by or
under common control with such person. For purposes of this Section 1.2,
"CONTROL" shall mean ownership or control, directly or indirectly, of at least
50% of the outstanding stock or other voting rights entitled to elect directors
or if the person is not a corporation, the corresponding managing authority.
Notwithstanding the foregoing, in no event will Licensee be considered an
Affiliate of Licensor nor will Licensor be considered an Affiliate of Licensee.
1.3. "BROADBAND PRODUCTS" means programming that requires transmission at
data rates which would enable real time, full screen, full motion video at equal
to or better than NTSC broadcast resolution. Programming that does not require
transmission at such data rates but which is nevertheless transmitted at such
data rates is not considered to be "Broadband Products" for the purposes of this
definition.
1.4. "CONSUMER AND COMMERCIAL PRODUCTS" means goods and services that are
based on, incorporate or display the Licensor Properties, other than the Portal
Products. Examples of Consumer and Commercial Products include, without
limitation, hats and t-shirts; publications and TV shows.
1.5. "DERIVATIVE WORK" means: (A) without limitation, any computer
program, work product, service, improvement, supplement, modification,
alteration, addition, revision, enhancement, new version, new edition, remake,
sequel, translation, adaptation, design, plot, theme, character, story line,
concept, scene, audio-visual display, interface element or aspect, in any
medium, format, use or form whatsoever, whether interactive or linear and
whether now known or unknown, that is derived in any manner, directly or
indirectly, from any Licensor Property, or any part or aspect thereof, or that
uses or incorporates any Licensor Property, or any part or aspect thereof; (B)
any "derivative work" of any Licensor Property, or any part or aspect thereof,
as defined in the Copyright Law of the U.S., Title 17 U.S.C. (S) 101 et seq.
(the "COPYRIGHT LAW"); and (C) any material or documentation related to any of
the foregoing.
1.6. "INTELLECTUAL PROPERTY RIGHTS" means any and all (by whatever name or
term known or designated) tangible and intangible and now known or hereafter
existing (A) rights associated with works of authorship throughout the universe,
including but not limited to copyrights (including without limitation the sole
and exclusive right to prepare "derivative works" (as defined in the Copyright
Law) of the copyrighted work and to copy, manufacture, reproduce, distribute
copies of, modify, publicly perform and publicly display the copyrighted work
and all derivative works thereof), moral rights (including without limitation
any right to identification of authorship and any limitation on subsequent
modification) and mask-works, (B) rights in and relating to the protection of
trademarks, service marks, trade names, goodwill,
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rights in packaging, rights of publicity and privacy, merchandising rights,
advertising rights and similar rights, (C) rights in and relating to the
protection of trade secrets and confidential information, (D) patents, designs,
algorithms and other industrial property rights and rights associated therewith,
(E) Web addresses, sites, and domain names, (F) other intellectual and
industrial property and proprietary rights (of every kind and nature throughout
the universe and however designated) relating to intangible property that are
analogous to any of the foregoing rights (including without limitation logos,
character rights, "rental" rights and rights to remuneration), whether arising
by operation of law, contract, license or otherwise, (G) registrations,
applications, renewals, extensions, continuations, divisions or reissues thereof
now or hereafter in force throughout the universe (including without limitation
rights in any of the foregoing), and (H) rights in and relating to the sole and
exclusive possession, ownership and use of any of the foregoing throughout the
universe, including without limitation the right to license and sublicense,
franchise, assign, pledge, mortgage, sell, transfer, convey, grant, gift over,
divide, partition and use (or not use) in any way any of the foregoing now or
hereafter (including without limitation any claims and causes of action of any
kind with respect to, and any other rights relating to the enforcement of, any
of the foregoing).
1.7. "LAWS" mean any and all applicable laws, rules and regulations,
including, but not limited to, local and national laws, rules and regulations,
and treaties pertaining to any of Licensee's activities in connection with this
Agreement.
1.8. "LICENSEE AFFILIATES" means Licensee and all of its Affiliates.
1.9. "LICENSEE REPRESENTATIVE" means the representative of Licensee on the
Advisory Committee.
1.10. "LICENSEE TECHNOLOGY" means all proprietary computer systems,
computer software (including all source code, object code, firmware, development
tools, files, records and data and all media on which any of the foregoing is
recorded), and all techniques, methods, applications and other technology that
Licensee owns, Controls or acquires, to the extent utilized within or for the
development, production, operation or distribution of the Portal Products during
the term hereof. For the purposes of this Section 1.10, "CONTROL" means the
ability to grant the licenses set forth herein without payment of royalties or
other consideration to third parties. In the event that any technology would be
considered to be Licensee Technology but for the obligation of the Licensee to
pay royalties or other consideration to a third party, then Licensor shall have
the right, at its option, to pay such royalties or other consideration and
include such technology in the definition of Licensee Technology.
1.11. "LICENSOR AFFILIATES" means Licensor and all of its Affiliates.
1.12. "LICENSOR COMPETITOR" means Dream Works, Time Warner, Comcast, News
Corp., Viacom, Sony, Seagrams/Universal, MGM, CBS, NBC, TCI, USA Networks, AOL,
Microsoft, Yahoo, Excite, Lycos and CNET, and their respective Affiliates and
successors.
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1.13. "LICENSOR PROPERTIES" means (i) the brands, names, logos, trademarks
and service marks used in the Portal Products, (ii) the specifications (both
functional and design-oriented) and user interface mock-ups, prototype
development work, market research and business development planning work and
materials prepared by Starwave Corporation on a work-for-hire basis for Licensor
prior to the Effective Time, (iii) all URLs and other Web addresses, sites and
domain names owned, licensed or applied for, from time to time, by or on behalf
of Licensor for use in the Portal Products or otherwise used in the operation of
the Portal Products, and (iv) the copyrights in the design of all the Portal
Products user interfaces, and "derivative works" thereof, as defined in the
Copyright Law, prepared by or on behalf of Licensor or Licensee during the term
of this Agreement; provided, that Licensee brands, URLs and other Web addresses,
sites and domain names, names, trademarks, service marks and other marks
existing as of the date first written above and third party brands, URLs and
other Web addresses, sites and domain names, names, trademarks, service marks
and other marks shall not be considered to be Licensor Properties.
1.14. "LICENSOR REPRESENTATIVE" means the representative of Licensor on
the Advisory Committee.
1.15. "PORTAL PRODUCTS" means the internet portal service to be named "Go
Networks," or another name mutually agreed by the parties, to be developed and
produced by Licensee utilizing the Licensor Properties, including but not
limited to all channels, sub-channels, sections, sites, features, services,
utilities and applications relating thereto; provided, however, that "Portal
Products" shall not in any event include Broadband Products or Consumer and
Commercial Products.
1.16. "PROMOTIONAL SERVICE AGREEMENT" has the meaning specified in the
Recitals.
1.17. "STANDARDS" means the standards and practices for content and
advertising materials that appear on, or are reachable by direct links from, the
Portal Products but excluding directory listings and search results that direct
a viewer outside the Portal Products, as such standards and practices are agreed
to between Licensee and Licensor pursuant to the Product Management Agreement,
as amended or modified from time to time in accordance with the Product
Management Agreement.
1.18. "VENTURES" means ESPN/Starwave Partners, a New York General
Partnership (or its successor) and ABCNews/Starwave Partners, a New York
General Partnership (or its successor).
2. TERM.
The term of this Agreement shall commence as of the Effective Time and
shall continue in perpetuity, unless terminated earlier in accordance with
Section 10 hereof (the "TERM").
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3. GRANT OF RIGHTS BY LICENSOR.
Licensor grants to Licensee the exclusive (subject to Section 5 hereof),
perpetual (subject to Section 10 hereof), worldwide, irrevocable (except as
expressly set forth in Section 10.1), sublicensable (subject to Section 4
hereof) right and license to utilize, reproduce, distribute, and otherwise
exploit (i) the Licensor Properties, (ii) Derivative Works of the Licensor
Properties and (iii) any modifications or improvements to the Licensor
Properties, in the development, operation, production, marketing, promotion,
distribution, sale, license and other exploitation of the Portal Products; and
to (whether by Licensee or by a third party on behalf of Licensee) modify,
improve and prepare Derivative Works of, incorporating or based upon the
Licensor Properties. The right to distribute includes without limitation the
right to sell, market, transmit by any means whether now known or hereafter
devised, display, advertise and otherwise promote the Portal Products in
accordance with and subject to the terms and conditions of this Agreement. In
addition, for so long as the Product Management Agreement is in effect, the
foregoing license rights shall also be subject to the terms and conditions of
the Product Management Agreement. Licensee acknowledges and agrees that the
license granted under this Section 3 is limited to the Portal Products as
specifically defined in Section 1.15 and does not grant Licensee any rights or
licenses with respect to any other products or services. All rights not
specifically, expressly and/or exclusively granted by Licensor to Licensee are
hereby reserved by Licensor.
4. SUBLICENSE RIGHTS.
Licensee may sublicense any and all of the rights and licenses granted in
Section 3 above with respect to the Licensor Properties to the extent necessary
or convenient, as reasonably determined by the Licensee Representative after
consultation with the Licensor Representative. Licensee acknowledges and agrees
that this Section 4 is intended to permit Licensee to sublicense the Licensor
Properties solely for the Portal Products as specifically defined in Section
1.15 above and does not grant Licensee any rights or licenses with respect to
any other products or services. Notwithstanding the foregoing, (a) Licensee
shall not sublicense all or any part of the Licensor Properties to any Licensor
Competitor, and (b) Licensee shall require, as a condition to any permissible
sublicense, that each sublicensee shall be made aware of, and agree in writing
to comply with, the Standards as well as Licensor's Code of Conduct for
licensees, a copy of which is attached as Exhibit A hereto. Notwithstanding the
foregoing provisions of this Section 4, nothing in this Agreement will restrict
Licensee, without the consent of Licensor, from placing links that incorporate
Licensor Properties on any and all third party internet and intranet sites,
which links permit users to connect to the Portal Products from third-party
sites, subject to compliance by any such third party, as required by Licensor,
with the Standards.
5. LICENSOR RIGHTS TO LICENSOR PROPERTIES.
Licensor shall not, and shall not appoint, permit or license any third
party (including but not limited to Affiliates of the Licensor) to, use or
otherwise exploit the Licensor Properties for
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any purpose without the prior written consent of Licensee; provided, however,
that such consent shall not be unreasonably withheld if such use (a) is not
competitive with the Portal Products or any other products or services then
offered by Licensee or any of its Affiliates or the Ventures or anticipated to
be offered by Licensee set forth in the Annual Business Plan and Budget for the
Portal Products, or (b) would not otherwise be reasonably expected to have an
adverse impact on the business of the Portal Products, in each case, as
reasonably determined by the Licensee Representative in good faith, upon
consultation with the Licensor Representative. The parties agree that, without
limiting the generality of the foregoing, any internet portal service in any
other county or region is competitive with the Portal Products.
6. ROYALTIES AND PAYMENTS.
6.1 LICENSEE ROYALTIES.
(A) As used in this Section 6, the following words have the following
meanings. (i) "GOODS" means goods, securities, data, software, information or
other services other than Consumer and Commercial Products. (ii) "EXCLUDED
BUSINESSES" means Licensee's software sales and related services (such as
maintenance, support and training) and services that are unrelated to the Portal
Products (such as Web hosting). By way of example, sales of Licensee's Ultraseek
software product and related services are Excluded Businesses. (iii) "LICENSEE
NET REVENUE" means one-half (1/2) of the following: Licensee's revenue, less the
Licensee Revenue Exclusions and less the following deductions: (a) advertising
commissions; (b) credit card charges; (c) customs duties and taxes other than
taxes based upon Licensee=s income (e.g., sales, excise, withholding, and value-
added taxes); and (d) discounts, rebates, returns or credits, freight,
insurance, packaging, and other shipment expenses. In addition, in the event
that Licensee collects revenue with respect to the sale, license or other
distribution of Goods offered over the Portal Products as an agent or
distributor for the vendor, only the distributor or agency fee or commission
shall be included in the definition for "Licensee Net Revenue". (iv) "LICENSEE
REVENUE EXCLUSIONS" means (a) revenue attributable to Excluded Businesses, (b)
Licensor Royalties paid to Licensee under Section 6.2, and (c) any and all
revenue derived under each of the Partnership Agreements and the Management and
Services Agreements for the Ventures, including but not limited to revenue
derived from the Representation Agreements entered into between each of the
Ventures and Starwave Corporation. (v) "LICENSOR LICENSE REVENUE" means any
license fees and royalties received by Licensor to the extent attributable to
licensing of Consumer and Commercial Products. (vi) "LICENSOR NET REVENUE" means
revenue (other than Licensor License Revenue) received by Licensor to the extent
attributable to any Consumer and Commercial Products, less the following
deductions: (a) advertising commissions; (b) credit card charges; (c) customs
duties and taxes other than taxes based upon Licensor's income (e.g., sales,
excise, withholding, and value-added taxes); and (d) discounts, rebates, returns
or credits, freight, insurance, packaging, and other shipment expenses.
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(B) As payment for the rights granted by Licensor hereunder, Licensee
shall pay Licensor royalties (the "LICENSEE ROYALTIES") equal to two percent
(2%) of Licensee Net Revenue in any fiscal year.
(C) Notwithstanding the foregoing provisions of this Section 6, (i)
Licensee shall not be obligated to pay Licensor any Licensee Royalties and
Licensee Royalties shall not be earned or accrued until the completion of the
first full Licensee fiscal year in which there are positive earnings before
interest, taxes and amortization ("EBITA") excluding EBITA attributable to
Licensee Revenue Exclusions, and (ii) Licensee Royalty payments in any fiscal
year shall not exceed fifteen percent (15%) of EBITA in such fiscal year
excluding EBITA attributable to Licensee Revenue Exclusions.
6.2 LICENSOR ROYALTIES. If Licensor produces or sublicenses the
production of Consumer and Commercial Products under the terms of this
Agreement, Licensor shall pay Licensee royalties ("LICENSOR ROYALTIES) equal to
a percentage of the Licensor Net Revenue and Licensor License Revenue in any
fiscal year attributable to any Consumer and Commercial Products as follows.
For Licensor Net Revenue, the percentage shall be (i) [*] for Consumer and
Commercial Products that are sold or distributed through the Portal Products and
(ii) [*] for Consumer and Commercial Products that are sold or distributed by
any other means. For Licensor License Revenue, the percentage shall be [*] for
Consumer and Commercial Products that are sold or distributed through the Portal
Products and [*] for Consumer and Commercial Products that are sold or
distributed by any other means. An example of a calculation of Licensor
Royalties under this Section 6.2 is set forth in Exhibit C.
6.3 PAYMENT.
(A) Licensee Royalties for a fiscal year are due and payable to Licensor
within forty-five (45) days after the end of such fiscal year.
(B) Licensor Royalties for a fiscal year are due and payable to Licensee
within forty-five (45) days after the end of such fiscal year.
6.4 PAYMENT FORMS/TAXES. All payments due to Licensor hereunder shall be
made by wire transfer to an account notified to Licensee. Licensor shall be
responsible for any and all taxes that are payable with respect to payments made
to Licensor hereunder and Licensor shall indemnify and hold harmless Licensee
from and against all damages, costs, losses, liabilities and expenses arising
out of or relating to nonpayment of such taxes. All payments due to Licensee
hereunder shall be made by wire transfer to an account notified to Licensor.
Licensee shall be responsible for any and all taxes that are payable with
respect to payments made to Licensor hereunder and Licensor shall indemnify and
hold harmless Licensee from and against all
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damages, costs, losses, liabilities and expenses arising out of or relating to
nonpayment of such taxes.
6.5 PERIODIC STATEMENTS. Licensee shall deliver to Licensor, within forty-
five (45) days after the end of each calendar quarter of the Term, income
statements for the Portal Products for the prior calendar quarter (that reflect
the calculation of Licensee Net Revenue), together with royalty reports and
traffic reports for such quarter. In addition, in each twelve (12) month period
during the Term, Licensee shall provide Licensor with a statement signed by
Licensee's external auditors certifying the accuracy of all royalty reports
provided hereunder. Licensor shall deliver to Licensee, within forty-five (45)
days after the end of each calendar quarter of the Term, income statements for
any Consumer and Commercial Products for the prior calendar quarter (that
reflect the calculation of Licensor Net Revenue and Licensor License Revenue),
together with royalty reports for such quarter. In addition, in each twelve (12)
month period during the Term, Licensor shall provide Licensee with a statement
signed by Licensor's external auditors certifying the accuracy of all royalty
reports provided hereunder.
6.6 AUDITS. Each party (the "Payor Party") agrees to retain, for three
(3) years after the Term, accurate records of all transactions relating to this
Agreement. No more than one time in any twelve (12) month period, during the
Term and for a period of three (3) years thereafter, the other party (the "Payee
Party") shall have the right, during the Payor Party's normal business hours
upon at least fifteen (15) business days prior notice to the Payor Party, to
have an independent auditor mutually agreed upon by the parties examine and make
extracts of all such records that relate to the revenue of the products subject
to Royalties hereunder, subject to reasonable confidentiality protections with
respect to information disclosed by the Payor Party. If any audit pursuant to
this Section 6.6 detects a shortfall in calculation of Royalties paid to the
Payee Party, the Payee Party shall pay interest, at a rate of ten percent (10%)
per annum (or, if less, the maximum rate permitted by law) from the date due, on
any unpaid amount. In addition, if in an audit of the Payee Party's records it
is determined that there is a shortfall of ten percent (10%) or more in the
amount of Royalties for the period which is the subject of such audit, the Payor
Party shall reimburse the Payee Party for reasonable out-of-pocket costs of the
audit and any overpayment discovered in the course of such audit shall be
refunded by the Payee Party to the Payor Party.
7. OWNERSHIP OF PROPRIETARY RIGHTS.
7.1 LICENSOR OWNERSHIP. Licensee acknowledges that, except for the license
expressly granted in this Agreement, Licensee has not acquired and will not
acquire any right, interest or title to the Licensor Properties by reason of
this Agreement or through the exercise of any rights in the Licensor Properties
granted to Licensee hereunder. Licensee further acknowledges that all
proprietary rights in the Licensor Properties and the good will associated
therewith are solely owned by and belong to Licensor, and that all additional
goodwill associated with the Licensor Properties created through the use thereof
by Licensee shall inure to the sole benefit of Licensor. As between Licensor
and Licensee and its permitted sublicensees, Licensor
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shall be considered the creator of the Licensor Properties, and all rights in
the Licensor Properties shall be the property of Licensor. In addition, Licensee
hereby grants, assigns and conveys to Licensor any and all rights Licensee may
now have or may be deemed to have in the future with respect to the Licensor
Properties, or any portion thereof. Licensee agrees not to register or attempt
to register any brand, names, marks, or other elements of the Licensor
Properties as a trademark, service xxxx, Internet domain name, trade name, or
any similar trademarks or name, with any domestic or foreign governmental or
quasi-governmental authority which would be likely to cause confusion with any
of the Licensor Properties.
7.2 LICENSEE OWNERSHIP. Licensor shall not acquire any right, interest,
or title to the Licensee Technology or any derivative works thereof (as defined
in the Copyright Law) through the exercise of any rights granted to Licensor
hereunder. As between Licensee and Licensor, Licensee shall be considered the
creator of the Licensee Technology and such derivative works, and all rights in
the Licensee Technology and such derivative works, including without limitation
the copyrights in and to the Licensee Technology and such derivative works,
shall be the property of Licensee. In addition, Licensor hereby grants, assigns
and conveys to Licensee any and all rights Licensor may now have or may be
deemed to have in the future with respect to the Licensee Technology and such
derivative works, including without limitation, any copyright to the Licensee
Technology and such derivative works, or any portion thereof.
8. PROTECTION OF PROPRIETARY RIGHTS.
8.1. CONTROL MEASURES. Each party shall implement adequate control
measures to protect Licensor's Intellectual Property Rights and to cooperate in
the other party's efforts to protect such Intellectual Property Rights. Neither
party shall commit any act or omit to take any act or permit any act to be taken
or not to be taken that would cause any of the Licensor Properties to vest in
the public domain anywhere in the United States and Canada.
8.2. MARKS AND NOTICES. Licensee shall use all brands, names and marks
included within the Licensor Properties in the form stipulated by Licensor, and
shall include such trademark and copyright notices as Licensor may request in
connection with Licensee's use of the Licensor Properties hereunder, and
Licensee shall place, as Licensor shall reasonably direct, such copyright and
trademark notices within the Portal Products. Other than as set forth in this
Agreement, Licensee shall make no use of the Licensor Properties or of any
designation confusingly similar to any of the Licensor Properties without the
prior written consent of Licensor.
8.3. DISNEY. Except as set forth in this Agreement, neither Licensee nor
any Licensee Affiliate or other party shall acquire any right under this
Agreement to use, and Licensee shall not use, and shall not knowingly allow or
assist any Licensee Affiliate or other party to use, (A) the name "Disney"
(either alone or in conjunction with or as a part of any other word, name or
phrase) or (B) any Licensor Property or any other fanciful character or design,
any music or any Intellectual Property Right of any Licensor Affiliate (i) in
any advertising, publicity or
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promotion or other disclosure, (ii) in any in-house publication, (iii) to
express or imply any endorsement of the Portal Products, Licensee, or any of its
products or services, or (iv) in any other manner or for any purpose whatsoever
(whether or not similar to any of the foregoing).
8.4 NOTICE OF INFRINGEMENT. Each party shall promptly report to the
other party if an officer of such party becomes aware of (a) any infringement of
any of such other party's Intellectual Property Rights by any third party, (b)
any infringement by any such third party of any right granted hereunder and (c)
any unauthorized copying or distribution of the Portal Products or any component
thereof (including without limitation any artwork or music contained therein) by
any third party.
8.5 ENFORCEMENT.
(A) Licensor shall have the right, in its discretion after consultation
with Licensee, to maintain and enforce Licensor's Intellectual Property Rights
in the Licensor Properties against third parties and to employ attorneys and
institute and defend actions and proceedings and take any other appropriate
steps to protect all of Licensor's rights and interests in and to the Licensor
Properties and every portion thereof, at Licensor's expense. Licensor shall
settle, compromise in good faith, or in any other manner dispose of any matter,
claim, action or proceeding and satisfy any judgment that may be rendered in any
manner as Licensor in its sole discretion may determine; provided, however, that
Licensee shall have the right to participate in the defense and/or settlement of
any such matter, claim, action or proceeding with counsel of its own choosing,
at Licensee's expense, and Licensor shall not enter into any settlement which
may require Licensee to admit liability or have an adverse impact on Licensee,
without Licensee's prior written approval. Licensor shall have the right to
recoup from any recovery its costs and expenses incurred in enforcing the
Licensor Properties. Any remaining amounts after recoupment of such costs and
expenses shall be divided equally between Licensee and Licensor within thirty
(30) days of receipt thereof. Licensee shall have the right to examine
Licensor's records with respect to the computation of such costs and expenses
and the amount of any recovery obtained by Licensor during Licensor's normal
business hours upon fifteen (15) business days prior notice and subject to
reasonable confidentiality protections for information disclosed.
(B) In the event that Licensor informs Licensee of its election not to
maintain or enforce Licensor's Intellectual Property Rights in the Licensor
Properties against third parties, or fails to maintain or enforce such
Intellectual Property Rights within a reasonable period of time after
notification by Licensee of infringing activity and request by Licensee to do
so, then Licensor agrees that Licensee shall have the right to employ attorneys
and institute and defend actions and proceedings and take any other appropriate
steps to protect all of Licensor's rights and interests in and to the Licensor
Properties and every portion thereof, at Licensee's expense. Licensee shall
settle, compromise in good faith or in any other manner dispose of any matter,
claim, action or proceeding and satisfy any judgment that may be rendered in any
manner as Licensee may determine after consultation with Licensor; provided,
however, that Licensor shall
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have the right to participate in the defense and/or settlement of any such
matter, claim, action or proceeding with counsel of its own choosing, at
Licensor's expense, and Licensee shall not enter into any settlement which may
require Licensor to admit liability or have an adverse impact on Licensor,
without Licensor's prior written approval. Licensee shall have the right to
recoup from any recovery its costs and expenses incurred in enforcing the
Licensor Properties. Any remaining amounts after recoupment of such costs and
expenses shall be divided equally between Licensee and Licensor within thirty
(30) days of receipt thereof. Licensor shall have the right to examine
Licensee's records with respect to the computation of such costs and expenses
and the amount of any recovery obtained by Licensee during Licensee's normal
business hours upon fifteen (15) business days prior notice and subject to
reasonable confidentiality protections for information disclosed. Licensor shall
take all such actions as may be necessary or convenient under the laws of any
jurisdiction to give Licensee the benefit of the rights granted in this Section
8.5(b), including the execution of documents and instruments and, if necessary,
naming Licensor as a party in legal action.
8.6. QUALITY. Licensee agrees to maintain a consistent level of quality
of the Portal Products substantially equal to that found in Licensee's existing
internet services, and further agrees to maintain a level of quality in
connection with its use of the Licensor Properties that is consistent with
general industry standards. Licensee acknowledges that Licensor shall
periodically monitor Licensee's use of the Licensor Properties in connection
with the Portal Products.
9. REPRESENTATIONS, WARRANTIES, LIMITATIONS AND INDEMNIFICATION.
9.1. REPRESENTATIONS AND WARRANTIES OF LICENSEE. Licensee represents and
warrants that (A) it has the right, power and authority to enter into this
Agreement and to fully perform its obligations under this Agreement; and (B) the
making of this Agreement by it does not violate any agreement existing between
it and any other person or entity.
9.2. INDEMNIFICATION BY LICENSEE. Licensee shall defend, at its sole
expense, any claim, suit or proceeding brought against Licensor by any third
party (A) which if true would be any breach of any of the representations,
warranties or agreements made by Licensee under this Agreement, or (B) a claim
that the Licensee Technology when used as permitted in Exhibit A violates or
infringes any copyright of any third party (each, a "LICENSOR CLAIM").
Licensee shall pay any damages and costs finally awarded against Licensor and/or
any settlement amounts entered into with respect to such Licensor Claim;
provided that (a) Licensor shall promptly notify Licensee of any Licensor Claim
for which indemnification is sought pursuant to this Section 9.2 by Licensor and
Licensee shall be provided with a copy of each communication, notice or other
action relating to said claim; (b) Licensee shall have the right to assume sole
authority to conduct the trial or settlement of such claim or any negotiations
related thereto at Licensee's expense and (c) Licensor shall have provided
Licensee with all information and assistance reasonably requested by Licensee in
connection with such claim or suit. If it is
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adjudicatively determined, or if Licensee believes, that the Licensee Technology
infringes any Intellectual Property Right, or if the license or use of the
Licensee Technology, or any part thereof, is, as a result, enjoined, then
Licensee may, at its election, option and expense: (i) replace the Licensee
Technology or part thereof, with other noninfringing suitable technology; or
(ii) modify the Licensee Technology or part thereof to become noninfringing.
Licensee will not be liable for any costs or expenses incurred without its prior
written authorization. Notwithstanding the foregoing provisions of this Section
9.2, Licensee shall have no liability for (i) any infringement claims alleging
infringement by any completed equipment or any assembly, circuit, combination,
method or process in which any of the Licensee Technology may be used but not
covering the Licensee Technology standing alone; or (ii) any modification of the
Licensee Technology, or part thereof, (unless such modification was made by or
at the written request of Licensee) where such infringement would not have
occurred but for such modifications; or (iii) any suits or proceedings covered
under Section 9.6 below. Licensee shall keep Licensor informed of, and consult
with Licensor in connection with the progress of each Licensor Claim; and
Licensee shall not have any right, without Licensor's written consent, to settle
any Licensor Claim if such settlement arises from or is part of any criminal
action, suit or proceeding or contains an acknowledgment of any liability on the
part of any Licensor Affiliate. Licensor shall have the right, in its absolute
discretion, to employ at its own expense attorneys of its own choice and subject
to the foregoing, to participate in the defense of any Licensor Claim.
9.3. REPRESENTATIONS AND WARRANTIES OF LICENSOR. Licensor represents and
warrants that (A) it has the right, power and authority to enter into this
Agreement and to fully perform its obligations under this Agreement and (B) the
making of this Agreement by it does not violate any agreement existing between
it and any other person or entity and (C) as of the Effective Time, Licensor is
a wholly owned subsidiary of TWDC.
9.4. DISCLAIMER OF WARRANTIES. Except for the express warranties set
forth in this Section 9, neither party makes any warranties, express, implied,
statutory or otherwise, with respect to the subject matter hereof. THE PARTIES
SPECIFICALLY DISCLAIM THE IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT
AND FITNESS FOR A PARTICULAR PURPOSE.
9.5. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE
UNDER OR IN CONNECTION WITH THIS AGREEMENT FOR ANY LOSS OF PROFIT OR ANY OTHER
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE OR OTHER INDIRECT
DAMAGES OF ANY NATURE, FOR ANY REASON, INCLUDING WITHOUT LIMITATION THE BREACH
OF THIS AGREEMENT EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THE FOREGOING PROVISIONS OF THIS SECTION 9.4 WILL NOT OPERATE TO LIMIT
EITHER PARTY'S OBLIGATIONS EXPRESSLY ASSUMED IN SECTIONS 9.2 AND 9.6.
9.6. INDEMNIFICATION BY LICENSOR. Licensor shall defend, at its sole
expense, any claim, suit or proceeding brought against Licensee by a third party
insofar as such suit or
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proceeding shall be based upon a claim (A) that if true would be a breach of the
representations, warranties or agreements made by Licensor under this Agreement,
or (B) a claim that the Licensor Properties or any modifications made by
Licensor to the Licensee Technology or part thereof (unless any such
modification was made by or at the written request of Licensee) where such
infringement would not have occurred but for such modification, violate or
infringe any copyright of such third party. Licensor shall pay any damages and
costs finally awarded against Licensee, and/or settlement amounts agreed to with
respect to any such claim, provided that: (A) Licensor shall have been promptly
notified of the suit or claim by Licensee and provided with a copy of each
communication, notice or other action relating to said claim; (B) Licensor shall
have the right to assume sole authority to conduct the trial or settlement of
such claim or any negotiations related thereto at Licensor's expense; and (c)
Licensee shall have provided Licensor all information and assistance reasonably
requested by Licensor in connection with such claim or suit. Subject to the
foregoing, Licensee shall have the right, at its own expense and in its absolute
discretion, to employ attorneys of its own choice and to participate in the
defense and/or settlement of any claim, suit or proceeding covered under this
Section 9.6.
10. TERMINATION.
10.1. TERMINATION BY LICENSOR. Licensor shall have the right to
immediately terminate this Agreement upon written notice to Licensee in the
event of the occurrence of one or more of the following:
(A) At the date of the consummation of an acquisition by any person or
group (within the meaning of Rule 13d-5(b)(1) promulgated under the Securities
Exchange Act of 1934) of 25% or more of the then-outstanding voting equity of
Licensee; provided, however, that in the event that such acquisition constitutes
a "Triggering Event" (as defined in Section 1 of the "poison pill" share
purchase rights plan of Licensee) and the Licensee does not redeem the share
purchase rights under the plan, the foregoing percentage shall be calculated
assuming that the share purchase rights that would be issued as a result of such
Triggering Event are exercised in full pursuant to the "flip-in" provisions of
Section 11(a)(ii) of such plan as of immediately prior to such acquisition.; or
(B) If Licensee fails to use commercially reasonable efforts to spend
(including but not limited to promotional spending) the Investment Amount (as
defined below) for the Portal Products (i) by more than fifteen percent (15%) in
each of two consecutive fiscal years and (ii) by more than twenty five percent
(25%) in the aggregate for that two year period; provided, however, that
Licensor's right to terminate this Agreement under this Section 10.1(b) shall
terminate upon the earlier to occur of the following after the first three (3)
full fiscal years: (x) after Licensee's EBITA (as defined in Section 6) less
EBITA attributable to Licensee Revenue Exclusions has been positive for two (2)
consecutive fiscal years and (y) ten (10) years after the date first set forth
above. As used in this Section 10.1(b), the "INVESTMENT AMOUNT" is the
investment amount for a fiscal year approved by a unanimous vote of the Advisory
Committee. The parties have agreed on the following initial Investment Amounts
for the first three fiscal
-13-
years: (A) $40,500,000 in the first full fiscal year, (B) $58,300,000 in the
second full fiscal year and (C) $64,800,000 in the third full fiscal year. If
(i) in any of the first three full fiscal years after the date hereof, the
Investment Amount is not approved by a unanimous vote of the Advisory Committee
by the last day of the preceding fiscal year, then, until a new Investment
Amount is approved, the corresponding year of the initial Investment Amounts set
forth above will remain in effect and (ii) after the first three years, if an
Investment Amount for any fiscal year is not approved by a unanimous vote of the
Advisory Committee by the last day of the preceding fiscal year, then, until a
new Investment Amount is approved, the Investment Amount for the immediately
preceding fiscal year will remain in effect (or, if no Investment Amount is
approved in the first three years, the last year of the initial Investment
Amount will remain in effect), and in each case in clause (ii), increased in an
amount equal to 50% of the increase in the projected revenue growth for the
Portal Products between the current fiscal year and the subsequent fiscal year,
provided, that, if such projected revenue growth is a negative number, such
aggregate amount shall be increased in an amount equal to the percentage
increase or decrease in the Consumer Price Index for Urban Wage Earners and
Clerical Workers [All Urban Consumers], U.S. City Average (1982-84=100]
Unadjusted, all items index, published by the Bureau of Labor Statistics, United
States Department of Labor (the "CPI Factor") for the preceding twelve-month
period. In the event that the Advisory Committee cannot agree on a projected
revenue growth for the Portal Products for a particular fiscal year, the
Investment Amount for such fiscal year shall be increased in an amount equal to
the actual growth rate in revenue for the Portal Products between the prior two
fiscal years. If such growth rate is a negative number, such Investment Amount
shall be adjusted by the CPI Factor. In each year, the Investment Amount
adjusted as provided above shall be the baseline for any adjustments for the
subsequent year.; or
(C) In the event that Licensee files a petition in bankruptcy through a
decision of the majority of Licensee's Disinterested Directors (as defined in
that certain Governance Agreement by and between the parties of even date
herewith) or is adjudged bankrupt or is placed in the hands of a receiver.
(D) Except as expressly provided in this Section 10.1, Licensor shall
have no right to terminate this Agreement or the rights or licenses set forth
herein.
10.2. TERMINATION BY LICENSEE. Licensee shall have the right to
immediately terminate this Agreement upon written notice to Licensor in the
event that Licensor makes any assignment for the benefit of creditors or files a
petition in bankruptcy or is adjudged bankrupt or becomes insolvent or is placed
in the hands of a receiver.
10.3 GRANT OF LICENSE OF LICENSEE TECHNOLOGY. In the event of and
effective upon the effective date of termination of this Agreement by Licensor
pursuant to Section 10.1(a), (b) or (c) above, Licensee grants to Licensor the
license set forth in Exhibit B on the terms and conditions set forth in Exhibit
B.
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10.4. EFFECT OF TERMINATION. Sixty (60) days after the effective date of
termination pursuant to Section 10.1, all rights granted to Licensee under or
pursuant to this Agreement shall terminate. The following provisions of this
Agreement shall survive expiration or termination of this Agreement for any
reason: 5, 7, 8, 9, 10.3, 10.4, and 11.
11. GENERAL PROVISIONS.
11.1. NOTICES. All notices which either party is required or may desire
to serve upon the other party shall be in writing, addressed to the party to be
served as follows:
(A) if to Licensor:
The Xxxx Disney Company
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Buena Vista Internet Group
000 X. Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(B) if to Licensee:
Infoseek Corporation
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, President
Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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(C) with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such notice may be served by courier, facsimile (provided oral
confirmation of receipt is immediately obtained or a hard copy is concurrently
sent by national overnight delivery service) or national overnight delivery
service. Notice shall be deemed served upon personal or courier delivery or
upon the date sent.
11.2. ENTIRE AGREEMENT. This Agreement, together with the exhibits
attached hereto constitutes the complete understanding and agreement between
Licensor and Licensee with respect to the transactions contemplated herein.
11.3. WAIVER. No waiver of any provision of this Agreement or relating
thereto shall be effective, except pursuant to a written instrument signed by
the party waiving compliance.
11.4. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is intended
or shall be construed to give any person, other than the parties hereto, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
11.5. ASSIGNMENT. This Agreement may not be assigned by a party hereto,
by operation of law or otherwise, without the other party's prior written
consent, in its sole discretion; provided, however, that either party may assign
this Agreement to its parent corporation or any entity of which its parent owns
at least 80% of the voting equity.
11.6. FURTHER ASSURANCES. Licensee agrees to do and perform all such
further acts and things and shall execute and deliver such other agreements,
certificates, instruments and documents necessary or that Licensor may deem
advisable in order to carry out the intent and accomplish the purposes of this
Agreement and to evidence, perfect or otherwise confirm Licensor's Licensee's
rights hereunder.
11.7. SEVERABILITY. If any of the provisions of this Agreement shall be
adjudged by a court of competent jurisdiction to be void, such provision shall
apply with such modifications as may be necessary to make it valid and
effective.
11.8. GOVERNING LAW, FORUM AND JURISDICTION. This Agreement shall be
governed by the laws of the State of California without giving effect to
principles of conflicts of law. Any action arising out of or relating to this
Agreement shall be filed only in the courts of the State of
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California for the County of Los Angeles, or the United States District Court
for the Central District of California. The parties hereby consent and submit to
the personal jurisdiction of such courts for the purposes of litigating any such
action.
11.9. REMEDIES. Except as expressly provided herein, either party hereto
shall have all rights and remedies available to it in the event of a breach of
this Agreement by the other party, including without limitation the right to
seek specific performance of the terms hereof and injunctive relief in respect
of any such breach by the other party. All remedies provided for herein shall
be cumulative, and the exercise of any particular remedy by a party shall not
limit or preclude the exercise of any other remedy available to such party.
IN WITNESS WHEREOF, the duly authorized representatives of each of the parties
hereto have executed this Agreement as of the day and year first written above.
DISNEY ENTERPRISES, INC. INFOSEEK CORPORATION
/s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
------------------------- ---------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Sr. Vice President Title: President and CEO
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EXHIBIT B
TERMS OF LICENSE OF LICENSEE TECHNOLOGY
1. GRANT OF LICENSE.
(A) Licensee grants to Licensor and its Affiliates a nonexclusive,
nontransferable, royalty-free, perpetual right to utilize the Licensee
Technology (along with the source code and related documentation which shall be
delivered to Licensor within ten (10) days of the effective date of this
license) solely in the development, production, operation and distribution of
the Portal Products (as such service may be operated by Licensor and its
Affiliates), to the extent that Licensee owns or controls such Licensee
Technology as of the effective date of termination of this Agreement by Licensor
under Section 10.1(a), (b) or (c) and to the extent that the Licensee Technology
is actually being utilized by Licensee in the development, production or
distribution of Portal Products within one year before such date. For purposes
of this Section 1(a), "control" means the ability to grant the licenses set
forth herein without payment of royalties or other consideration to third
parties; provided, that if any technology would be included in the definition of
Licensee Technology but for the obligations of Licensee to pay such royalties or
other consideration, Licensor shall be entitled to pay such royalties or other
consideration and include such technology in the license granted herein.
(B) Licensor agrees that it will not: (i) sublicense the Licensee
Technology (except as necessary for the development of the Portal Products, in
which case Licensor agrees that it will not sublicense the Licensee Technology
to any competitors of Licensee); (ii) decompile, disassemble, reverse engineer
or otherwise attempt to derive source code from the Licensee Technology, in
whole or in part; (iii) modify or prepare derivative works of the Licensee
Technology, except to the extent necessary or desirable for the production,
distribution, operation, development and exploitation of the Portal Products
(and such derivative works shall be owned by Licensor); (iv) copy the Licensee
Technology (except for one (1) copy to be used by Licensor for back up purposes
only); or (v) use the Licensee Technology for the benefit of or on behalf of any
third party or otherwise on a service bureau basis. As used in this Section
1(b), "competitor" means Yahoo, Excite, Lycos, CNET, Netscape, Microsoft and
America Online and their respective Affiliates and successors and any other
entity a substantial portion of whose revenue is derived from internet or
intranet search and directory activities.
(C) Licensor shall have the right to fully integrate the Licensed
Technology into the Portal Products.
(D) All rights not specifically and/or expressly granted by Licensee to
Licensor are hereby reserved by Licensee.
B-2
2. MAINTENANCE AND SUPPORT.
(A) For so long as Licensor pays to Licensee the consideration required
under Section 2(b) below but in no event more than five (5) years after the
effective date of this license, the rights granted in Section 1 above shall
include all "Upgrades" to the Licensee Technology. For purposes of this
section, "Upgrades" shall mean updates and enhancements to the Licensee
Technology which are prepared by or for Licensee for commercial use and not for
testing.
(B) In consideration for the right to such Upgrades, Licensor agrees to
pay to Licensee royalty rates which are as favorable as those then offered to
any third party, and further agrees to similar terms and conditions as those
agreed to by the most favorably treated third party; provided however, that if
Licensee does not offer any or all or any such Upgrades to the Licensee
Technology for license to any third party, the license granted hereunder shall
be offered at fair market rates, as reasonably determined by the parties based
on the license rates for similar technology.
(C) Unless agreed in writing by the parties, this Agreement does not
include, and Licensee shall have no obligation to provide to Licensor, any
support or technical assistance.
3. TERMINATION.
(A) If either party materially breaches any material term or condition of
this Agreement and fails to remedy such breach within a period of thirty (30)
days after written notice of such breach is given to it by the other party, such
other party may terminate this Agreement immediately upon written notice.
(B) In the event of termination of this Agreement, (i) all rights and
licenses granted herein shall automatically terminate, (ii) Licensor shall ship
to Licensee, within thirty (30) days, all tangible items in its possession which
contain any Licensee Technology and shall promptly erase all copies of the
Licensee Technology from computer memory, and (iii) Licensor shall cease to
utilize any Licensee Technology.
4. CONFIDENTIALITY. Licensor agrees to keep confidential all Licensee
Technology, not to use any Licensee Technology except as set forth herein, and
not to disclose any Licensee Technology to any third party (except as necessary
in connection with a permitted sublicense, subject to confidentiality provisions
and the right of Licensee to audit such third party's compliance with such
confidentiality provisions). Without limiting the foregoing, Licensor shall use
at least the same degree of care which it uses to prevent the disclosure of its
own confidential information of like importance (which, in the case of source
code, is of the utmost importance) to prevent the disclosure of Licensee
Technology. Licensor shall promptly notify Licensee of any actual or suspected
misuse or unauthorized disclosure of Licensee Technology.
5. DISCLAIMER OF LIABILITY. IN NO EVENT SHALL LICENSEE BE LIABLE UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE LICENSE FOR ANY
B-3
LOSS OF PROFIT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE OR OTHER
INDIRECT DAMAGES OF ANY NATURE FOR ANY REASON, INCLUDING WITHOUT LIMITATION
BREACH OF THIS AGREEMENT AND EVEN IF LICENSEE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
6. DISCLAIMER OF WARRANTIES. LICENSEE MAKES NO WARRANTIES, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE WITH RESPECT TO THE LICENSEE TECHNOLOGY AND
LICENSEE SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.
7. REPRESENTATIONS AND WARRANTIES. The provisions of Section 9 apply to
this Exhibit B.
8. MISCELLANEOUS. The provisions of Section 11 apply to this Exhibit B.
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