EXHIBIT 10.4
LICENSE AND SERVICES
AGREEMENT
Dated as of July 28, 1997
The parties to this agreement are XXXX-XXXXX INC., which has its principal
office at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxx-Xxxxx"), ZDTV LLC, a
Delaware limited liability company, which has its principal offices at 000
Xxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("ZDTV"), ZD TELEVISION
PRODUCTIONS, INC., a Delaware Corporation, which has its principal offices at
000 Xxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("ZDTP", together with
ZDTV, the "TV Affiliates"), MAC HOLDINGS (AMERICA) INC., a Delaware corporation
("MAC America") and MAC Inc., a Japanese company which is the parent of MAC
America ("MAC").
Xxxx-Xxxxx is a leading integrated media and marketing company focused on
the computer technology industry, with platforms in magazine publishing, trade
shows, exhibitions and conferences, online content, market research and
education.
ZDTV, a wholly-owned subsidiary of MAC America, has announced plans to
produce ZDTV: Your Computer Channel, a 24-hour cable television channel and
integrated Web site focused exclusively on computers, technology and the
Internet (the "Channel").
ZDTP, a wholly-owned subsidiary of MAC America, creates customized
programming for ZDTV and for third parties.
The TV Affiliates desire to license, and Xxxx-Xxxxx desires to grant the TV
Affiliates, a license to the "ZD" trade name and xxxx, certain other trademarks
of Xxxx-Xxxxx and certain editorial content of Xxxx-Xxxxx for use in the TV
Affiliates' products and services.
MAC America, the owner of the TV Affiliates, desires that Xxxx-Xxxxx
provide management, centralized services and other services to the TV
Affiliates, and Xxxx-Xxxxx desires to perform such services, in accordance with
the terms and conditions of this Agreement.
In consideration of Xxxx-Xxxxx' licenses and services hereunder, MAC
America has agreed to provide Xxxx-Xxxxx an option to purchase the TV
Affiliates.
Therefore, the parties agree as follows:
1. Trademark License.
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(a) License Grant. Subject to the terms and conditions of this agreement,
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Xxxx-Xxxxx hereby grants the TV Affiliates a non-exclusive, non-transferable,
royalty-free license to use (i) the "ZD" trade name and xxxx solely in the
manner and form and for the purpose(s) specifically set forth on Exhibit A,
which includes the right to use "ZD" in the company name of each TV Affiliate
and in the name of the Channel; and (ii) those marks and the other Xxxx-Xxxxx
trademarks
set forth in Exhibit B hereto (collectively with "ZD", the "Licensed Marks") in
such products and services of the TV Affiliates as may be approved by Xxxx-
Xxxxx, such approval not to be unreasonably withheld. Without limiting the
generality of the foregoing, Xxxx-Xxxxx shall have the right, at any time, upon
written notice to the TV Affiliates, to amend Exhibit B to withdraw from the
license granted herein any of the Licensed Marks which are no longer used by
Xxxx-Xxxxx (whether due to discontinuance, sale or otherwise), or for which
Xxxx-Xxxxx wishes to substitute another xxxx, and to add to the license granted
herein, at Xxxx-Xxxxx' sole discretion, any new xxxx. All rights not
specifically granted to the TV Affiliates herein are retained by Xxxx-Xxxxx.
(b) Ownership of the Licensed Marks.
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Each TV Affiliate acknowledges and agrees that the Licensed Marks
together with the goodwill of the business symbolized thereby, are the sole and
exclusive properties of Xxxx-Xxxxx. All use by the TV Affiliates of the
Licensed Marks shall inure solely to the benefit of Xxxx-Xxxxx. Each TV
Affiliate agrees that it will not use any of the Licensed Marks or any other
material which is owned by Xxxx-Xxxxx in any way other than as authorized
herein.
(ii) Upon Xxxx-Xxxxx' written instructions, the TV Affiliates will
assist and fully cooperate with Xxxx-Xxxxx' efforts during and after the term of
this agreement to secure, protect and preserve Xxxx-Xxxxx' rights and interests
in the Licensed Marks.
(c) Use of Licensed Marks; Quality Control by Xxxx-Xxxxx.
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Each TV Affiliate warrants that it shall maintain the quality of
their respective products and services at a level consistent with the high
quality and standard of Xxxx-Xxxxx' products and services. Upon Xxxx-Xxxxx'
request, the TV Affiliates shall provide to Xxxx-Xxxxx access to representative
samples of all of the TV Affiliates' uses of the Licensed Marks in connection
with their products and services.
Each TV Affiliate acknowledges and agrees that the Licensed Marks have
an established prestige, reputation and goodwill and are of great value to Xxxx-
Xxxxx. The TV Affiliates each warrant that it shall use the Licensed Marks in
its services and products in a responsible manner to protect and enhance the
prestige of the Licensed Marks and Xxxx-Xxxxx. Each TV Affiliate further
warrants that it shall only use the Licensed Marks in its services and products
in a manner consistent with Xxxx-Xxxxx trademark usage policies and Exhibit A,
as it may be amended by Xxxx-Xxxxx from time to time upon notice to the TV
Affiliates.
Each TV Affiliate shall remedy any deficiencies in its use of the
Licensed Marks or the quality of its services and products as soon as
practicable following receipt of notice from Xxxx-Xxxxx and in any event, within
ten days.
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2. Content License
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(a) License Grant. Xxxx-Xxxxx hereby grants the TV Affiliates a worldwide,
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non-exclusive, non-transferable license to incorporate all or part of the
Content (as defined below) into ZDTV's products and services and to deliver
those products and services via the Channel or other distribution methods
including ZDTV's site on the World Wide Web.
(i) For purposes of this agreement, the term "Content" shall mean the
editorial text of articles published in Xxxx-Xxxxx' publications, as mutually
selected and agreed upon by the parties hereto, including, data or other text,
but excluding any articles, data or other text as to which Xxxx-Xxxxx has not
obtained the right to license the use contemplated by this agreement, and such
other Xxxx-Xxxxx content as may be mutually agreed upon by the parties hereto.
(ii) Notwithstanding any suggestion to the contrary above, Xxxx-Xxxxx
may itself distribute the Content in any media, including, without limitation,
cable, broadcasts or other forms of television, or license third parties to
distribute or incorporate the Content into databases, and other products and
services.
(iii) Xxxx-Xxxxx shall have the right to exercise editorial and other
quality control over the ZDTV products and services which use a Licensed Xxxx as
part of its name or are associated or may be reasonably perceived as associated
with Xxxx-Xxxxx or any Licensed Xxxx, all as Xxxx-Xxxxx deems appropriate to
ensure the quality of such products and services and protection of the goodwill
of its trademarks. The TV Affiliates shall provide Xxxx-Xxxxx with reasonable
access, at ZDTV's expense, to exercise such control and to review all such
products and services.
(iv) Xxxx-Xxxxx may also restrict the TV Affiliates' use or
distribution of the Content in any product or service that may have an adverse
effect on the operations or value of Xxxx-Xxxxx' products and services. For
example, if by distributing certain Content by cable television or online before
or shortly after distribution of the Xxxx-Xxxxx print publication containing
such content there is a risk of a material loss of readership or other adverse
effect the on circulation of that publication, Xxxx-Xxxxx may impose a
reasonable embargo or waiting period on the distribution of the content of that
publication or impose other reasonable restrictions on the distribution of the
product or service containing such content.
3. Management; Services.
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(a) Management. Xxxx-Xxxxx shall furnish management services to the TV
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Affiliates including overseeing the development and operation of the Channel and
other products and services and the development and implementation of strategic
plans and new projects. The
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President of each TV Affiliate will be responsible to MAC America for its
management but will keep the Chief Executive Officer of Xxxx-Xxxxx informed of
all material business issues and any material or strategic deviation from the TV
Affiliates' business plans.
(b) Provision of Services. Xxxx-Xxxxx shall provide the following
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centralized services to the TV Affiliates on the same allocated cost basis as it
charges its own operations: (i) accounting; (ii) tax preparation; (iii) Human
Resources; (iv) administration of payroll and benefits; (v) facilities; (vi)
insurance; (vii) legal; (viii) Information Systems; (ix) Internet services; and
(x) other similar centralized services.
(c) Standard of Services. The nature, quality and consistency of the
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services provided by Xxxx-Xxxxx pursuant to this Section shall be substantially
consistent with services provided by Xxxx-Xxxxx, as applicable, to its own
wholly-owned operations and Xxxx-Xxxxx shall not be liable for any error or
omission in the services provided except for willful misconduct.
4. Joint Promotion and Marketing. Xxxx-Xxxxx and the TV Affiliates shall
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promote each other's products and services. Xxxx-Xxxxx shall include the
products and services of the TV Affiliates in its media marketing and sales
activities, including within the ZD Media Network.
5. Funding; Reimbursement.
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(a) Through December 31, 1998, Xxxx-Xxxxx shall advance funds necessary for
the TV Affiliates to conduct their business in its ordinary course. Such
amounts advanced, including the allocated costs of central services provided by
Xxxx-Xxxxx, shall be repaid to Xxxx-Xxxxx by MAC America; provided, however, MAC
America has approved the level of funding, such approval not to be unreasonably
withheld. Such funding shall be reviewed each quarter in advance and Xxxx-Xxxxx
shall present a detailed annual plan and quarterly plan to MAC America at least
30 days prior to the start of each calendar quarter. MAC America shall promptly
respond to such plans. All amounts expended that are not contemplated in such
plans and approved by MAC America will be for Xxxx-Xxxxx' accounts.
Reimbursement shall be made at the end of each calendar year commencing with the
year ending December 31, 1997, or in the event Xxxx-Xxxxx exercises its option
in Section 6 below prior to the end of any year, be set off against the option
price or at such time as this agreement is terminated by either party if such
termination is prior to the end of a calendar year. Reimbursement shall also
include interest at the 30 day Libor rate (in effect for each month) plus 0.5
percent.
(b) Xxxx-Xxxxx may also enter into leases of real property and equipment
necessary for the TV Affiliates' business and such guarantees of such leases as
it deems appropriate. Upon the
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termination of this agreement (other than by Xxxx-Xxxxx' exercise of its option
below), MAC America shall secure the release of Xxxx-Xxxxx from all such
obligations.
6. Option; Sale of the TV Affiliates. During the period commencing as of
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the date of this Agreement and continuing to and including December 31, 1998,
Xxxx-Xxxxx or its designee shall have the option to purchase from MAC America
all of MAC America's stock or interests in the TV Affiliates and/or all of the
assets of the TV Affiliates for a purchase price equal to the total amount of
cash invested by MAC America (including any amounts owed to Xxxx-Xxxxx pursuant
to paragraph 5(a)) in the TV Affiliates plus a return of 10% per annum on its
investment. Xxxx-Xxxxx shall exercise its option by written notice to MAC
America. Such purchase shall be free and clear of any liens or claims by third
parties and shall be carried out through purchase agreements and other
documentation (including appropriate representations and warranties and other
terms and conditions) as is standard for a sale of this type. The closing shall
be held as soon after the option notice as is practicable. While the option
shall be in effect, MAC America may not transfer any of its interest in the TV
Affiliates or allow either of the TV Affiliates to sell any of their assets or
rights other than in the ordinary course of business.
7. Term, Termination.
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(a) The initial term of this agreement shall commence with the date of this
agreement and shall continue through December 31, 1998. The agreement shall
continue after the initial term unless terminated in writing by either party
with at least 90 days' notice, provided, however, Xxxx-Xxxxx shall have no
further obligations to fund the TV Affiliates after December 31, 1998.
(b) Notwithstanding anything to the contrary above, Xxxx-Xxxxx may
terminate this agreement if one or both of the TV Affiliates fail to cure any
material breach within 30 days after notice from Xxxx-Xxxxx of that breach.
8. Assignment. This agreement shall be binding on and shall inure to the
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benefit of the parties and their respective heirs, legal representatives,
successors and assigns. This agreement and the rights granted herein may not be
assigned by any party without the prior written consent of the other parties.
9. License Warranties; Indemnity.
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(a) Xxxx-Xxxxx represents and warrants it has all the rights necessary to
grant the TV Affiliates the licenses granted herein. Xxxx-Xxxxx will indemnify,
defend and hold the TV Affiliates harmless from any loss, liability, damage or
expense (including reasonable attorneys' fees and legal costs) arising from any
claim by a third party of infringement of trademark or copyright arising out of
the use by the TV Affiliates of the Licensed Marks or the Content, provided,
that
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such claims do not arise out of any errors, additions, deletions or other
changes (collectively, "alterations") to those materials made by either TV
Affiliate.
(b) MAC America and the TV Affiliates shall, jointly and severally,
indemnify and hold Xxxx-Xxxxx harmless from and against any claim by a third
party for loss, liability, damage or expense (including reasonable attorneys'
fees and legal costs) arising out of any material contained in any of the TV
Affiliates' service or products which is not provided by Xxxx-Xxxxx, or any
alteration of the Licensed Marks or Content.
(c) The foregoing indemnity obligations shall be conditioned upon prompt
notice by the party requesting indemnification of any claim for which
indemnification may be sought, complete control of the defense and settlement of
the matter by the indemnifying party, and reasonable cooperation by the party
claiming indemnification.
10. Guaranty by MAC. MAC hereby guarantees payment when due of all
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obligations of MAC America, without set off, notice or demand.
11. Notice. Any notice or other communication under this agreement shall be in
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writing and shall be considered given when delivered personally or mailed by
overnight courier or registered mail, return receipt requested, to the parties
at their respective addresses set forth above (or at such other address as a
party may specify by notice to the other). A copy of any notice to Xxxx-Xxxxx
shall also be sent to its Legal Department at the same address.
12. Miscellaneous.
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(a) This agreement, and the performance under it, shall be deemed made in
and construed in accordance with the laws of the State of New York applicable to
agreements made in and to be performed in New York.
(b) No party shall be considered in default or liable under this agreement
in the event of delay or failure to perform as a result of war, civil riot,
epidemic, act of God, fire, strike, government restriction or other
circumstances beyond that party's reasonable control.
(c) This agreement constitutes the entire understanding of the parties with
respect to its subject matter, supersedes all previous agreements, arrangements
and understandings, written or oral, relating to its subject matter and cannot
be amended except by a writing signed by both parties.
(d) No waiver of any provisions of this agreement shall be effective or
binding unless in writing and signed by both parties. No waiver of any breach of
any provisions shall constitute a waiver or any other breach of that provision
or any other provision.
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute this Agreement as of the date set forth above.
ZDTV LLC ZD TELEVISION PRODUCTIONS, INC.
By: _________________________ By: _________________________
Name: Name:
Title: Title:
XXXX-XXXXX INC. MAC HOLDINGS (AMERICA)
INC.
BY: _________________________ BY: _________________________
Name: Name:
Title: Title:
MAC INC.
By: _________________________
Name:
Title:
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