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EXHIBIT 99.01
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80(B)(4), 200.83
AND 230.406.
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT is made effective as of November
9, 1999 (the "Effective Date") by GENERAL MAGIC, INC., a Delaware corporation
having a place of business at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000
("Magic"), and GENERAL MOTORS CORPORATION, a Delaware corporation having a place
of business at 000 Xxxx Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxx, Xxxxxxxx 00000, by
and through its OnStar division ("GM").
BACKGROUND
A. Magic has designed, developed, and deployed a voice-accessible
service known as the Portico virtual assistant service (the "Portico Service").
In addition, Magic has expertise in building and operating voice-accessible
network services.
B. GM desires to license from Magic a custom-branded version of the
Portico Service, to be hosted initially in Magic's network operations center in
Sunnyvale, California, for initial deployment primarily through equipment
installed onboard vehicles as part of GM's OnStar system.
C. Magic is willing to develop a custom-branded version of the Portico
Service for GM, and to host and operate this custom-branded version of the
Service for GM as part of GM's OnStar system, and to assist GM to transition
this custom-branded version of the Service to a call center operated by GM's
OnStar division on the terms and conditions set forth in this Agreement.
The Parties therefore agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this Agreement:
1.1. "ACCEPTANCE TEST PLAN" means a written plan for testing and either
accepting or rejecting Magic Deliverables individually and the OnStar Service as
a whole, which will include the testing procedures to be used and the
responsibilities of each Party in performing the tests, to be developed and
mutually approved pursuant to Section 2.1 (Development Services), as such plan
may be modified and updated from time to time by written agreement of the
Parties.
1.2. "AFFILIATE" means, with respect to GM, Saab Automobile AB and any
entity that GM directly or indirectly controls, where "control" means ownership
of more than fifty percent (50%) of the outstanding voting securities or voting
interests of the entity in question.
1.3. "API" means an applications programmer's interface.
1.4. "CUSTOM FEATURES" means additional features or functionality of the
OnStar Service requested by GM after the Launch Date pursuant to Section 2.6
(Custom Features).
1.5. "EXECUTABLE CODE" means the fully compiled version of a software
program that can be executed by a computer and used by an end user without
further compilation.
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1.6. "FIELD OF USE" means services designed to be used primarily through
equipment installed onboard vehicles.
1.7. "GM BACKGROUND TECHNOLOGY" means all software, programming code,
APIs, development tools, speech recognition engines, hardware and other
technology existing as of the Effective Date and used by GM to develop, operate,
or maintain the OnStar System as it exists as of the Effective Date.
1.8. "GM DELIVERABLES" has the meaning given to such term in Section 2.7
(GM Background Technology).
1.9. "XX XXXXX" means the trade names and trademarks of GM and its
Affiliates used in connection with the OnStar Service.
1.10. "ILLICIT CODE" means any hidden files, any automatically
replicating, transmitting or activating computer program, any virus (or other
malicious computer program), or any hardware-limiting or software-limiting
function (including, but not limited to, any key, node lock, time-out or other
similar functions), whether implemented by electronic or other means.
1.11. "IMPROVEMENT" (1) when made by the party that owns the Background
Technology, means, with respect to any software or other technology, any and all
(a) enhanced, modified, updated, or upgraded versions thereof, (b) translations,
abridgments, revisions, derivative works, or other forms in which the same may
be recast, transformed, or adapted, and (c) improvements thereon, regardless of
whether any portion thereof is or may be validly copyrighted, patented, or
protected as a trade secret; and (2) when made by the other party means, with
respect to any software, any and all (a) enhanced, modified, updated, or
upgraded versions thereof, (b) translations, abridgments, revisions, derivative
works, or other forms in which the same may be recast, transformed, or adapted,
and (c) improvements thereon that may be validly copyrighted.
1.12. "INITIAL PHASE" means the period of development of the OnStar
Service pursuant to Section 2.1 (Development Services) up through the Launch
Date.
1.13. "INTELLECTUAL PROPERTY RIGHTS" means all current and future
copyrights, trade secrets, patents and other patent rights, utility models, mask
work rights, moral rights, and all other intellectual property rights (except
for trademarks, trade names, and service marks) in any jurisdiction in the
world, including all applications and registrations with respect thereto.
1.14. "LAUNCH DATE" means the date on which the OnStar Service is first
made commercially available.
1.15. "LICENSE FEE" means the five million dollar ($5,000,000) fee to
be paid by GM to Magic pursuant to Section 6.1 (License Fee).
1.16. "MAGIC BACKGROUND TECHNOLOGY" means Magic Software and all other
software, programming code, APIs, development tools, speech recognition engines,
hardware and other technology existing as of the Effective Date and used by
Magic to develop, operate, or maintain the Portico Service.
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1.17. "MAGIC DELIVERABLES" means the items listed in Exhibit A, as it
may be amended from time to time by the Parties, to be developed by Magic and
delivered to GM in the course of development of the OnStar Service during the
Initial Phase, which will be specifically identified in accordance with Section
2.1 (Development Services).
1.18. "MAGIC SOFTWARE" means the proprietary software owned by Magic and
necessary to operate the OnStar Service, including any and all Updates thereto
furnished to GM.
1.19. "MATERIAL BREACH" of this Agreement by GM means any of the
following: (a) non-payment by GM of the License Fee; and (b) non-payment by GM
of the Support Fees during the term of this Agreement.
1.20. "'031 PATENT" means Magic's U.S. patent number 5,603,031 titled
"System and Method for Distributed Computation Based on Movement, Execution, and
Interaction of Processes in a Network."
1.21. "ONSTAR ITEMS" means the elements of the voice user interface and
graphical user interface customizations (including dialogue scripts, voice
prompts, and grammar enhancements for the voice user interface) developed by
Magic specifically for GM (including, by way of example, all XML scripts created
using any scripting tool during the term of this Agreement unless such
development is funded by Magic).
1.22. "ONSTAR SERVICE" means the custom-branded version of the Portico
Service designed for use primarily through equipment installed onboard vehicles,
to be developed by Magic for GM pursuant to this Agreement (including any Custom
Features developed pursuant to this Agreement).
1.23. "ONSTAR SYSTEM" means the interactive communications system
provided by GM and known as OnStar. It is expected that the OnStar Service will
be one component of the OnStar System.
1.24. "PARTY" means either Magic or GM, as the context requires, and
"Parties" means both Magic and GM.
1.25. "PERSON-MONTH" means the amount of time equivalent to one person
working full-time (i.e., forty (40) hours per week) for one full calendar month
(taking into account weekends and nationally recognized holidays).
1.26. "SCHEDULE" means the schedule for completion of various aspects of
the development work to be undertaken during the Initial Phase, as such
schedule, listed in Exhibit A, may be modified and updated from time to time in
accordance with Section 2.8 (Changes).
1.27. "SOURCE CODE" means the human-readable version of a software
program that can be compiled into Executable Code.
1.28. "SPECIFICATIONS" means the specifications for the OnStar Service,
to be developed and mutually approved pursuant to Section 2.1 (Development
Services), as such specifications, listed in Exhibit A, may be modified and
updated from time to time in accordance with Section 2.8 (Changes).
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1.29. "SUBSCRIBER" means an individual who has subscribed to the OnStar
Service pursuant to a signed, written agreement as described in Section 3.9
(Subscriber Agreements).
1.30. "UPDATE" means any new version of Magic Software that Magic
implements for the Portico Service.
1.31. "USER DATA" means data regarding Subscribers collected by Magic in
the course of providing the OnStar Service, including names, addresses, and
telephone numbers, as well as all messages and folders created by users of the
OnStar Service.
2. DEVELOPMENT OF ONSTAR SERVICE
2.1. DEVELOPMENT SERVICES. Magic will use diligent efforts to develop
the OnStar Service, to work with GM to make modifications to the OnStar System
as necessary to integrate the OnStar Service into the OnStar System's call
center, and to support GM in the transition of the OnStar Service into the
OnStar System's call center, all in accordance with the Schedule and the
Specifications and with assistance and input from GM as described below and in
Section 2.3 (Project Management). This work is expected to include, among other
things: (a) the development, mutual approval, and refinement of the list of
Magic Deliverables, Specifications, and Acceptance Test Plan; (b) the
development of interfaces between Magic Background Technology and the OnStar
System; and (c) the evaluation, testing, and acceptance of the OnStar Service in
accordance with Section 2.5 (Acceptance Testing). ). While Magic Deliverables,
Specifications and Acceptance Test Plan will be mutually agreed to, it is
understood that (a) GM will have strategic control of all aspects of the
OnStar-specific version of the desktop for the OnStar Service and (b) the
Specifications and Acceptance Test Plan will have the purpose of achieving [**].
2.2. COMMITTED RESOURCES. Magic will provide, [**] to GM (other than
reimbursement of reasonable travel expenses as provided in Section 6.6
(Expenses)), [**] working on the development of the OnStar Service as described
in Section 2.1 (Development Services). Any additional engineering services
requested by GM and provided by Magic with regard to the OnStar Service
(including the development of Custom Features pursuant to Section 2.6 (Custom
Features)) will be charged to GM at [**] unless the Parties agree in writing on
specific [**] by GM to Magic for such services.
2.3. PROJECT MANAGEMENT. Each Party will appoint a team of employees who
will be jointly responsible for managing the development work during the Initial
Phase. Each Party may replace the personnel on its project management team or
add new people to the team from time to time as it deems necessary or
appropriate. Each Party will designate one member of its team as the "Project
Manager"; it will be the responsibility of the Project Managers to ensure
orderly conduct of the development work and to attempt in good faith to resolve
any disputes between the Parties as they arise. Each Party may replace its
Project Manager or other members of its project team from time to time as it
deems necessary or appropriate, provided that each Party will use reasonable
efforts to minimize such replacements. The Project Managers will be empowered to
grant approvals with respect to Schedules, Specifications, and determinations of
whether the OnStar Service, or any Custom Feature, is suitable for commercial
release. However, the Project Managers will not have the authority to amend the
terms of this Agreement. Each Party will instruct its personnel to adhere, when
they are on the other Party's
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premises, to the workplace rules and policies of the other Party of which they
are informed by the other Party.
2.4. INDEPENDENT CONTRACTORS. Magic will use diligent efforts to have
[**] who will be working on the development of the OnStar Service during the
Initial Phase sign independent contractor agreements with GM that [**] Magic
becomes [**]. GM will approve the form of independent contractor agreement
before any such agreement is provided to [**], and provide Magic with [**] Magic
will be authorized to [**].
2.5. ACCEPTANCE TESTING. Upon delivery of Magic Deliverables, the
Parties will conduct testing of such Magic Deliverables in accordance with the
Acceptance Test Plan to determine whether such Magic Deliverables meet the
applicable Specifications in all material respects. Upon completion of the
development of the OnStar Service during the Initial Phase, the Parties will
conduct testing of the OnStar Service as a whole in accordance with the
Acceptance Test Plan to determine whether the OnStar Service operates in
accordance with the Specifications in all material respects. If the testing
results indicate that any Magic Deliverable meets the applicable Specifications
in all material respects, such Magic Deliverable will be deemed accepted.
Similarly, if the testing results indicate that the OnStar Service operates in
accordance with Specifications in all material respects, the OnStar Service will
be deemed accepted. Otherwise, Magic will use commercially reasonable efforts to
modify Magic Deliverables or the OnStar Service (as the case may be) and
acceptance testing (in accordance with the Acceptance Test Plan) will be
repeated as necessary until Magic Deliverables meet the applicable
Specifications in all material respects or the OnStar Service operates in
accordance with the Specifications in all material respects. If required, Magic
will perform the work necessary to modify and retest the OnStar Service [**]
(Committed Resources). If any Magic Deliverable or the OnStar Service as a whole
has not been accepted after three (3) rounds of testing as described above,
Magic will offer to GM, [**], the API documentation and other tools necessary to
develop or modify the Magic Deliverable or the OnStar Service and GM will have a
non-exclusive, non-transferable, limited license to use such API documentation
and tools solely to develop and modify the Magic Deliverable or the OnStar
Service until it is accepted as set forth above.
2.6. TIMING OF DELIVERY. The parties have reviewed the requirements
listed in Exhibit A and agree that they represent the proposed baseline
features, subject to further scoping of the GM requirements and technical
feasibility, intended for commercial release of the OnStar Service on the Launch
Date and the Parties have a reasonable expectation that the OnStar Service with
these features can be Launched in the OnStar System by July 1, 2000, subject to
further review as indicated above.
2.7. CUSTOM FEATURES
2.7.1. REQUESTS BY GM. After the Launch Date, GM may request that
Magic develop Custom Features by submitting to Magic a written request
describing the desired Custom Features in reasonable detail. Within thirty (30)
days of receiving such a request, Magic will evaluate the request and provide a
written response to GM identifying whether Magic believes it is feasible to
develop and implement the requested Custom Features, the anticipated
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amount of time needed to do so, and the cost of doing so. Unless Magic believes
that it is not feasible to develop and implement the requested Custom Features
(in which case Magic will provide a reasonably detailed explanation of the
reasons for this belief) or GM rejects Magic's estimate of the time and cost of
developing and implementing the requested Custom Features, the Parties will work
together to adopt a development schedule, specifications (which will become part
of the Specifications when jointly approved), and payment terms for the
requested Custom Features unless included in the Committed Resources, all of
which must be mutually approved in writing. Magic's written response will
include (i) a written description of the work Magic anticipates performing in
connection with the Custom Features; (ii) a schedule for commencing and
completing the Custom Features; (iii) Magic's prospective non-recurring charges
for such Custom Features; (iv) any increase or decrease in the recurring charges
as a result of the implementation of the Custom Features; (v) a description of
any software to be developed or modified by Magic or hardware to be provided by
Magic in connection with such Custom Features; (vi) the software, hardware, and
other resources and run-time requirements necessary to develop and operate any
new applications; (vii) the human resources necessary to develop and operate any
new applications or provide the Custom Features; (viii) list of any existing
software, hardware and/or other resources included in or to be used in
connection with such Custom Features; and (ix) suggested acceptance test
criteria and procedures in respect of any new applications or any products or
services.
2.7.2. DEVELOPMENT AND IMPLEMENTATION. Magic will use commercially
reasonable efforts to develop and implement Custom Features pursuant to the
mutually approved development schedule. If Magic is unable to develop or
implement the Custom Features in a timely fashion, Magic will offer to GM, [**],
the API documentation and other tools necessary to develop the Custom Features
so that GM may develop these Custom Features, and GM will have a non-exclusive,
non-transferable, limited license to use such API documentation and tools solely
to develop and implement these Custom Features. GM will deliver to Magic the
complete Source Code and technical documentation for any Improvements to the
Magic Background Technology delivered by Magic to GM under this Section 2.6.2
that are developed by or for GM.
2.8. GM BACKGROUND TECHNOLOGY. GM will deliver to Magic those components
of the GM Background Technology as the parties mutually agree are reasonably
necessary in order for Magic to develop, operate, and support the OnStar Service
and any Custom Features (collectively, the "GM Deliverables"). Magic will have a
non-exclusive, non-transferable (except as provided in Section 12.7
(Assignment)), royalty-free license during the term of this Agreement to use and
reproduce, and to the extent necessary modify and create Improvements to or
from, the GM Deliverables, solely for the purpose of developing, operating, and
supporting, the OnStar Service and any Custom Features. The GM Deliverables will
be considered Confidential Information of GM subject to Section 7
(Confidentiality).
2.9 CHANGES. Any change to the Schedule or the Specifications will
require the written approval of each Party's Project Manager. Any proposal to
change the Schedule or Specifications will be submitted in writing to both
Project Managers, who will then have fifteen (15) days to review the proposal
and communicate with each other regarding the proposal. If the proposal is not
approved in writing by each Party's Project Manager within fifteen (15) days,
the proposal will have no effect and will not be binding on either Party, it
being understood that the parties will use commercially reasonable efforts to
implement GM's strategy for the OnStar version of the desktop and to maintain
the performance of the OnStar Service at the level of [**]
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[**]. During the term of this Agreement, GM will have priority at least as great
as that of any other customer or development or joint venture partner of Magic
to additional services from Magic as proposed changes may require.
2.10 WARRANTIES AND INDEMNIFICATION. Magic shall, upon GM's request and
at GM's cost, enforce all warranties or indemnifications given by
suppliers/licensors of software included in the OnStar Service to the extent
that such warranties and indemnifications are not assignable to GM and that
Magic determines not to assign them to GM.
2.11 INVENTORY. Magic shall provide to GM in January of each year during
this Agreement, an inventory, effective January 1 in any given year, of all
software platforms and applications utilized by Magic in connection with the
provision of the OnStar Service. Such inventory shall identify, in respect of
each software program, the version or release number and whether the copy of the
software program is: (i) GM Software or Magic Software; (ii) licensed or owned
and, if licensed, who the licensor and licensee are; and (iii) dedicated to GM
or shared with third parties.
2.12 SOFTWARE. The OnStar Service developed by Magic:
(i) shall not contain Illicit Code (as defined in
Exhibit A); and
(ii) shall not alter, damage or erase any data or
software in the OnStar Service without control of a
person operating the computing equipment on which
it resides.
As the sole and exclusive remedy to the occurrence of any
event prohibited in 2.12 (i) or (ii), Magic shall
immediately undertake, at no cost to GM, to remove such
virus, and to correct and repair any damage to data or
software caused by such virus
3. PROVISION OF ONSTAR SERVICE
3.1. LICENSES TO GM. Subject to the terms and conditions of this
Agreement, Magic hereby grants to GM the following worldwide, perpetual and
irrevocable (except as provided in Section 11.3 (Effects of Termination)),
non-transferable (except as provided in Section 14.7 (Assignment)),
non-exclusive (except as provided in Section 3.2 (Exclusivity)) licenses, under
all of Magic's applicable Intellectual Property Rights including the '031
Patent:
(a) to use all Magic Background Technology and all
Improvements thereto (other than OnStar Items) in the
Field of Use;
(b) to use and reproduce and to sublicense third party
contractors providing hosting services for the OnStar
System to use and reproduce (in Executable Code form only)
the Magic Software as necessary to operate the OnStar
Service as delivered by Magic and/or as extended by or for
GM solely within the Field of Use; and
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(c) to use, reproduce, modify, and create Improvements to the
Source Code for the Company Software, as necessary to
operate and support the OnStar Service solely within the
Field of Use (it being understood that this Source Code
license may be exercised by GM only upon the release of
the Source Code and related materials from escrow as
described in Section 3.2 (Source Code Escrow)).
GM understands and agrees that the OnStar Service will be offered and provided
only within the Field of Use unless the Parties agree in writing on the
royalties to be paid by GM to Magic for offering and providing the OnStar
Service outside the Field of Use. At GM's request, Magic will negotiate in good
faith with GM concerning a royalty-bearing, non-exclusive license to market the
OnStar Service to [**] on commercially reasonable mutually agreeable terms.
3.2. SOURCE CODE ESCROW. Upon execution of this Agreement, the Parties
will enter a source code escrow agreement in the form of Exhibit B (Source Code
Escrow Agreement) providing for deposit by Magic of the Source Code of the Magic
Software with an escrow agent satisfactory to both Parties. The Source Code
escrow agreement referred to above will provide for a release of the source code
and related escrow materials to GM only upon the occurrence of one of the
following events: (a) Magic voluntarily enters into bankruptcy proceedings, (b)
involuntary bankruptcy proceedings are commenced against Magic and not
discharged within ninety (90) days, or (c) Magic refuses to provide maintenance
and support for the OnStar Service on reasonable commercial terms following the
expiration or termination of this Agreement for any reason other than a Material
Breach by GM. GM will pay all fees and expenses of the escrow agent.
3.3. EXCLUSIVITY. Magic agrees that (a) for a period of [**] after the
Launch Date, Magic will not license the Magic Background Technology for use in
services within the Field of Use, and (b) for a period of [**] from the date of
GM's delivery of the applicable OnStar Item, Magic will not transfer or
sublicense its rights under its license to the OnStar Items (as set forth in
Section 4.9 (License of OnStar Items to Magic)) to any vehicle manufacturer or
any supplier thereof for use in services within the Field of Use. However,
unless otherwise agreed by the Parties in writing, (i) clause (a) of the
preceding sentence will cease to be of any force or effect if the Launch Date
does not occur within [**] from the Effective Date, and (ii) clause (b) of the
preceding sentence will cease to be of any force or effect if the Launch Date
does not occur within [**] from the Effective Date and at such time GM has no
present plans to commercially deploy the OnStar Service, in each case unless and
only to the extent that any such delay is caused by Magic's failure to fulfill
its obligations to develop the OnStar Service under this Agreement.
3.4. INITIAL HOSTING AND CUSTOMER SUPPORT BY MAGIC. Initially Magic will
host the OnStar Service (but not other parts of the OnStar System) in its
network operations center, which is currently located in Sunnyvale, California.
Magic will also provide second-level customer support for the OnStar Service as
described in Exhibit C (Second Level Support); however, GM will be solely
responsible for providing all first-level customer support for the OnStar
Service and all customer support for other aspects of the OnStar System such as
theft protection and lock-outs. While Magic is hosting the OnStar Service for
GM, Magic will use reasonable commercial efforts to achieve the service levels
set forth in Exhibit D (Service Levels). Exhibits
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C and D will be added in a form mutually agreed to by the Parties within 60 days
after the Effective Date.
3.5. TRANSITION TO GM. At GM's request, Magic will transition the
hosting and customer support for the OnStar Service to GM as follows. Magic will
deliver to GM a copy of all Magic Software, in executable code form. Magic will
also identify all hardware and third party software needed to operate the OnStar
Service; GM will be responsible for obtaining all required licenses for such
third party software and content, and all hardware and telecommunications
services needed to operate the OnStar Service, at its own expense. Magic will
assist in the installation, configuration, and implementation of the hardware,
Magic software and the third party software described above at GM's facilities,
as GM may reasonably request, at Magic's then-current standard hourly rates to
the extent not accomplished with the Committed Resources. Magic will invoice GM
for these fees, as well as any reasonable travel and other expenses actually
incurred by Magic in providing this assistance, on a monthly basis unless the
Parties agree otherwise in writing.
3.6. TECHNICAL SUPPORT. During the term of this Agreement, and provided
that GM is current in its payment of the Support Fees, (a) Magic will use
diligent efforts to correct any reproducible errors that cause the OnStar
Service not to conform to the Specifications in all material respects, and (b)
Magic will provide Updates to GM [**].
3.7. BRANDING. The OnStar Service will be marketed and provided under
the trade names and trademarks of GM (including "OnStar"). Any use of Magic's
trade names or trademarks by GM (other than references to Magic in accordance
with Section 14.9 (Publicity)) will require the express prior written approval
of Magic. As long as Magic is hosting the OnStar Service pursuant to Section 3.4
(Initial Hosting and Customer Support by Magic) or otherwise, Magic will have a
non-exclusive, non-transferable (except as provided in Section 14.7
(Assignment)), fully-paid and royalty-free license to use the XX Xxxxx solely to
the extent necessary to operate the OnStar Service on behalf of GM and its
Affiliates. All use of the XX Xxxxx of GM by Magic will inure to the benefit of
GM and its Affiliates. All rights to the XX Xxxxx not expressly licensed to
Magic in this Agreement are reserved to GM and its Affiliates.
3.8. SUBSCRIBER PRICING AND BILLING. As between the Parties, GM will
determine in its sole discretion the fees to be charged to Subscribers, customer
support, and any ancillary services provided by GM or Magic in connection with
the OnStar Service. As between the Parties, GM will be solely responsible for
billing Subscribers on a monthly basis. Once a month, at the end of each month,
Magic will create a CD-ROM containing the preceding month's daily call detail
reports (CDRs) for OnStar Service Subscriber accounts in Magic's standard format
and transmit it to GM. If GM requests modifications to Magic's standard format,
Magic will use commercially reasonable efforts to provide the CDRs in accordance
with the requested modifications. As between the Parties, GM will be solely
responsible for collecting payment from all Subscribers; any failure by GM to
collect amounts owed from such Subscribers will not be a breach of this
Agreement and will not affect GM's payment obligations to Magic hereunder.
3.9. SUBSCRIBER AGREEMENTS. Subscribers to the OnStar Service will be
required to sign a written agreement with GM or one of its Affiliates that
disclaims all warranties and liabilities on behalf of Magic (which may be
referred to as GM's "supplier" in such agreement) and contains restrictions and
disclaimers regarding the content available through the OnStar
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Service consistent with the disclaimers and restrictions in Magic's standard
Portico subscriber agreement (a copy of which has been furnished to GM).
3.10. USER DATA. User Data will be kept in a format that is jointly
specified and approved by Magic and GM. Magic will maintain a tape backup
facility for all User Data. GM will have the option to request that all or any
portion of the User Data be delivered to GM on a monthly basis or, at GM's
expense, more frequently. As long as Magic is hosting and operating the OnStar
Service for GM, Magic will have a non-exclusive, royalty-free, irrevocable
license to access, reproduce, and use any User Data for the purpose of
developing, operating, and supporting the OnStar Service (including the
administration of Subscriber accounts), subject to GM's applicable privacy
policies (which will be furnished to Magic in writing), and to compile such User
Data into aggregate data that cannot be attributed to, or used to identify, any
individual Subscriber.
4. OWNERSHIP AND LICENSES OF INTELLECTUAL PROPERTY RIGHTS
4.1. MAGIC BACKGROUND TECHNOLOGY. As between (a) Magic and (b) GM and
its Affiliates, Magic retains exclusive ownership of all Intellectual Property
Rights in and to the Magic Background Technology, the Portico Service, and
Magic's trade names and trademarks. Except as expressly provided in this
Agreement, all right, title, and interest to or in the foregoing are reserved by
Magic.
4.2. GM BACKGROUND TECHNOLOGY. As between (a) Magic and (b) GM and its
Affiliates, GM and its Affiliates retain exclusive ownership of all Intellectual
Property Rights in and to the GM Background Technology, the OnStar System
(except for those portions that under 4.1 are owned by Magic) and the XX Xxxxx.
Except as expressly provided in this Agreement, all right, title, and interest
to or in the foregoing are reserved by GM and its Affiliates.
4.3. IMPROVEMENTS TO MAGIC BACKGROUND TECHNOLOGY. As between (a) Magic
and (b) GM and its Affiliates, except as specifically provided in Section 4.5
(OnStar Items), Magic will exclusively own all Intellectual Property Rights in
and to all Improvements made by Magic (or by GM pursuant to Section 2.5
(Acceptance Testing) or Section 2.6.2 (Development and Implementation)) to the
Magic Background Technology (including any Improvements made to the platform for
the Service). Except as expressly provided in this Agreement, all right, title,
and interest to or in any such Improvements are reserved to Magic.
4.4. IMPROVEMENTS TO GM BACKGROUND TECHNOLOGY. As between (a) Magic and
(b) GM and its Affiliates, GM and its Affiliates will exclusively own all
Intellectual Property Rights in and to all Improvements made by GM or any of its
Affiliates (or by Magic pursuant to Section 2.7 (GM Background Technology)) to
the GM Background Technology. Except as expressly provided in this Agreement,
all right, title, and interest to or in any such Improvements are reserved to GM
and its Affiliates.
4.5. ONSTAR ITEMS. As between (a) Magic and (b) GM and its Affiliates,
GM will exclusively own all Intellectual Property Rights in and to the OnStar
Items. Except as expressly provided in this Agreement, all right, title, and
interest to or in any OnStar Items are reserved to GM and its Affiliates. It is
understood that ownership of the OnStar Items by GM and its Affiliates will not
preclude Magic from recreating elements of dialogue scripts, voice prompts,
grammars, and other elements of the program code for the OnStar Items that
cannot be
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implemented in a different manner because of the merger of the idea and the
expression they convey.
4.6. USER DATA. As between (a) Magic and (b) GM and its Affiliates, all
User Data will be owned exclusively by GM, and any aggregate data compiled by
Magic solely from User Data ("GM Aggregate Data") pursuant to Section 3.10 (User
Data) will be owned exclusively by GM. Except as expressly provided in this
Agreement, all right, title, and interest to or in User Data are reserved to GM
and its Affiliates, and all right, title, and interest to or in such GM
Aggregate Data are reserved to GM, with the exception that Magic can use the GM
Aggregate Data in connection with other aggregate data to create gross aggregate
data for use by Magic. Upon OnStar's request, Magic will deliver copies of the
GM Aggregate Data to OnStar once per month in Magic's then standard format.
4.7. ASSIGNMENT OF RIGHTS TO IMPROVEMENTS. To the extent that either
Party (the "Creator") creates Improvements that will be owned by the other Party
(the "Owner") pursuant to this Agreement, the Creator hereby irrevocably and
unconditionally assigns to the Owner all of the Creator's Copyrights in such
Improvements. If any such Copyrights are inherently non-assignable, the Creator
hereby irrevocably and unconditionally waives the enforcement of such rights
against the Owner and the Owner's employees, agents, and customers. If any such
Copyrights are inherently non-waivable, the Creator hereby grants the Owner an
exclusive (even as to the Creator), worldwide, perpetual and irrevocable
license, under such non-assignable, non-waivable Copyrights, to use, reproduce,
modify, create Improvements from, distribute, perform, display, make, have made,
sell, offer for sale, import, and otherwise practice and exploit in any manner
now known or hereafter conceived, such Improvements. And for any other
Intellectual Property Rights inherent in the Improvements, the Creator grants a
worldwide, perpetual and irrevocable license, under such other Intellectual
Property Rights, to use, reproduce, modify, create Improvements from,
distribute, perform, display, make, have made, sell, offer for sale, import, and
otherwise practice and exploit in any manner now known or hereafter conceived,
such Improvements.
4.8. COOPERATION. Each Party agrees to cooperate with the other party in
executing and filing any documents and taking any other action necessary or
reasonably requested by the other party in order to give effect to the foregoing
allocation of Intellectual Property Rights.
4.9. LICENSE OF ONSTAR ITEMS TO MAGIC. GM hereby grants (on behalf of
itself and its Affiliates, to the extent that GM has actual authority to do so,
and to the extent GM does not have actual authority to do so, the rights granted
to Affiliate(s) hereunder are conditioned upon the Affiliate(s) agreeing to
hereby grant) to Magic a worldwide, perpetual and irrevocable, non-transferable
(except as provided in Section 14.7 (Assignment)), non-exclusive, royalty-free
and fully paid license, under all of GM's and its Affiliates' applicable
Intellectual Property Rights, except as provided by Section 4.10, to use,
reproduce, perform, display, distribute, modify, and create Improvements to the
OnStar Items created during the term of this Agreement, as follows:
(a) during the [**] exclusivity period set forth in clause (b)
of Section 3.3 (Exclusivity), as such exclusivity period
may be shortened in accordance with Section 3.3
(Exclusivity), Magic may exercise these licensed rights
only outside the Field of Use; and
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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(b) after the expiration or termination of such exclusivity
period, Magic may exercise these licensed rights for any
purpose;
provided, however, that in either case Magic may not copy or reuse any XML or
other scripts included in the OnStar Items; the foregoing limitation does not
prevent the re-creation of XML or other scripts that cannot be implemented in a
different manner because of the merger of the idea and the expression they
convey. GM will deliver to Magic any OnStar Items necessary to operate and
support the OnStar Service (including Source Code) not already in Magic's
possession upon completion of the development thereof.
4.10. LICENSE TO MAGIC OF PATENTED INVENTIONS. GM will decide, on a
case-by-case basis, whether to license to Magic any patented inventions
independently developed by GM (or any of its Affiliates) for applications that
may be deployed using the Magic Background Technology or any Improvements
thereto owned by Magic.
4.11. PROPRIETARY RIGHTS PROTECTION. Except as expressly permitted in
Section 3.1 (License to GM), GM may not reproduce, alter, adapt, modify, create
Improvements to, distribute, sublicense, transfer, rent, lease, loan, timeshare,
otherwise make available to third parties, reverse engineer, decompile,
disassemble, or otherwise attempt to derive the Source Code for the Magic
Software. All copyright, trademark and other proprietary rights notices on or in
the copy of the Magic Software provided by Magic to GM must be reproduced on or
in all copies thereof made by or for GM or any of its Affiliates. No such
notices will affect the rights or obligations of either party to this agreement.
5. RIGHT TO BID. During the term of this Agreement, GM's OnStar Division
will provide Magic the right to bid upon all work outsourced by GM's OnStar
Division to perform development, hosting, and maintenance related to
voice-enabled services. This right to bid will apply only to development,
hosting, and maintenance services controlled by GM's OnStar Division (or its
successor).
6. FEES AND ROYALTIES
6.1. LICENSE FEE. Upon execution of this Agreement or closing of the
Series G Preferred Stock Purchase Agreement, whichever is later, GM will pay
Magic a one-time, non-refundable License Fee of five million dollars
($5,000,000) in consideration of the licenses granted to GM in Section 3.1
(Licenses to GM) and the development work done by Magic during the Initial
Phase. Upon payment in full of the License Fee, the licenses granted to GM in
Section 3.1 (Licenses to GM) will be royalty-free, except as provided in Section
6.2 (Royalties).
6.2. ROYALTIES. If GM provides the OnStar Service to Subscribers who
drive vehicles not manufactured by GM or any of its Affiliates, GM will pay
Magic a royalty as follows: [**] per year per subscriber for a period of (i)
[**] after Launch Date or (ii) until the number of subscribers in vehicles not
manufactured by GM or any of its Affiliates exceeds [**], whichever occurs
first. At that time, the Parties will enter into good faith negotiations to
establish a reasonable royalty rate for future use of the OnStar Service by such
Subscribers. If the Parties cannot agree upon the reasonable royalty rate, the
Parties will utilize the Dispute Resolution provisions of Article 11 to
determine the reasonable royalty rate.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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6.3. CUSTOM FEATURE DEVELOPMENT FEES. Pursuant to Section 2.6 (Custom
Features), before Magic will begin work on any Custom Features, the Parties must
agree on the fees to be paid to Magic for development of such Custom Features.
6.4. HOSTING FEES AND TRANSITION FEES. GM will pay the hosting fees
based upon the model in Exhibit F. In addition, GM will pay Magic fees, to the
extent not included in the Committed Resources, for Magic's assistance in the
transition of the hosting and customer support of the OnStar Service to GM, as
provided in Section 3.5 (Transition to GM).
6.5. SUPPORT FEES. During the term of this Agreement and contingent upon
closing of the Series G Preferred Stock Purchase Agreement, GM will pay Magic an
annual Support Fee of [**], due and payable quarterly on the first day of each
Quarter. As used above, "Quarter" means a three (3) month period beginning on
the first day of the first month following the Launch Date or any successive
three (3) month period. For example, if the Launch Date occurs on May 15, 2000,
the first Quarter will begin on June 1, 2000, the second Quarter will begin on
September 1, 2000, and so on. After the expiration or termination of this
Agreement (unless such termination is due to a Material Breach by GM), GM may
continue to receive technical support services from Magic at Magic's
then-current standard rates, pursuant to a separate agreement.
6.6. EXPENSES. Except as incurred under Section 2.11 or with respect to
repeat acceptance testing under Section 2.5, GM will pay or reimburse Magic for
all reasonable travel expenses (including airfare, lodging, local
transportation, meals, and other out-of-pocket expenses) actually incurred by
Magic or its personnel in performing development work, engineering services, or
other services for GM under this Agreement, in accordance with GM's then-current
expense reimbursement policies and procedures, which will be provided to Magic
in writing.
6.7. PAYMENT TERMS.
6.7.1. INVOICING. Magic shall issue invoices to the address
specified by GM in a format and on the media agreed upon by GM and Magic.
6.7.2. SUPPORTING DOCUMENTATION. Magic shall provide GM with such
supporting documentation and other information as reasonably requested by GM to
verify the accuracy of any invoice.
6.7.3. PAYMENT. Magic shall provide GM with invoices on a monthly
basis on or before the 15th day of each calendar month for all services
performed by Magic, including under the Committed Resources (for tracking
purposes), and all related charges incurred by GM during the immediately prior
calendar month. The last business day of the calendar month shall be the cut-off
for delivered services and related charges to be invoiced in the next calendar
month. GM shall pay invoices in accordance with its standard global payment
terms, Multilateral Netting System (MNS--2), that establishes the standard
minimum payment terms as the 2nd day of the 2nd month, following the shipment or
receipt of services or any materials used in connection therewith, in General
Motors Corporation's receiving system. Any payment by GM is without prejudice of
its right to contest the accuracy of any charges.
6.7.4 FEE DISPUTES
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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6.7.4.1. CONTINUING OBLIGATION OF PARTIES. Each of GM and Magic
acknowledges that the performance of this Agreement is critical to the
business and operations of GM and Magic. Therefore, in the event XX xxxx
fide disputes all or any portion of an invoice submitted by Magic, GM
may withhold payment, except for the License Fee and the Support Fee, of
the amount subject to the dispute; provided, however, that: (i) GM shall
continue to pay any undisputed amount when it becomes due and payable in
accordance with this Agreement; and (ii) Magic shall continue to provide
the Services or otherwise perform its obligations under this Agreement.
6.7.4.2. RESOLUTION OF DISPUTES. The Parties shall resolve the
dispute in accordance with the audit or dispute resolution procedures
set forth in this Agreement. No failure by GM to identify a contested
charge or charges prior to payment of the invoiced amount shall limit or
waive any of GM's rights or remedies with respect to such charges,
including GM's right to withhold such disputed amounts, except for the
License Fee and the Support Fee, from subsequent charges due to Magic.
Unpaid charges that are in dispute shall not be considered a basis for
default under this Agreement, except for the License Fee and the Support
Fee.
6.7.4.3. PAYMENT OF DISPUTED AMOUNT. In the event that it is
determined that one Party should pay all or part of a disputed amount to
the other, such Party shall pay such amount plus interest at a rate per
annum equal to the base rate established by LIBOR as of the date the
disputed amount would otherwise have been due or a comparable financial
institution mutually agreed to by GM and Magic. Unpaid charges that are
in dispute shall not be considered a basis for termination under this
Agreement.
6.8. TAXES
6.8.1. INFORMATION. Each Party shall provide and make available to
the other Party any applicable resale certificates, information regarding
out-of-jurisdiction sales or use of products or services, and other exemption
certificates or information reasonably requested by the other Party.
6.8.2. STRUCTURE. The Parties agree to utilize reasonable efforts
to structure the provision and receipt of services, as the case may be, in such
a fashion as to minimize, to the extent legally permissible, any sales, use,
value-added, withholding, and similar taxes payable by GM.
6.8.3. PAYMENT. Taxes will be allocated between the parties based
upon incidence by operation of law.
6.8.4. TAX CREDIT. In the event that Magic is entitled to claim a
foreign tax credit benefit with regard to withholding taxes associated with
cross border payments under any agreement with GM, the Parties agree that GM
shall not be charged or otherwise billed for such taxes.
6.8.5. COOPERATION. The Parties shall reasonably cooperate with
each other in connection with the other Party's efforts to minimize its
liability for taxes, to the extent legally permissible, and to support the other
Party upon audit by applicable taxing authorities in the following manner:
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6.8.5.1. COOPERATION AND REVIEW OF MAGIC BILLING AND COLLECTION
SYSTEM. The Parties will work together to ensure that the taxability
positions are jointly discussed. Further, Magic agrees to allow GM tax
staff, at least annually, and more frequently if reasonably requested by
GM, and at GM's expense, to review Magic's billing and collection
systems relating to taxes collected by Magic from GM under this
Agreement.
6.8.5.2. AUDIT. In the event that a taxing authority does not
agree to audit the charges payable in connection with this Agreement for
sales and use tax purposes, as part of Magic's sales and use tax audits,
and proposes to assess sales and use taxes directly against GM on the
aggregate charges for services provided to GM for which taxes are not
collected, Magic shall work directly with the taxing authority to
address audit concerns as they pertain to the charges or sales and use
taxes payable in connection with this Agreement. In the event that the
taxing authority requires any documentation to be submitted directly by
GM, Magic agrees to cooperate with GM in providing the necessary
documentation.
6.8.5.3. PAYMENT OF PENALTIES. Each party ("Tax Indemnitor")
agrees to pay and to hold the other party harmless against any penalty,
interest, or additional tax that may be assessed or levied as a result
of the failure or delay of the Tax Indemnitor or its agents to file any
return or information required by law, rule or regulation. Each party
agrees to provide reasonable assistance to the other party should the
other party contest any taxes imposed on it that result from this
Agreement.
7. CONFIDENTIALITY
7.1. CONFIDENTIALITY OBLIGATIONS.
7.1.1. STANDARD OF CARE. Each Party shall protect all Confidential
Information of the other Party with the same degree of care as it uses to avoid
unauthorized use, disclosure, publication or dissemination of its own
confidential information of a similar nature, but in no event less than a
reasonable degree of care. For purposes of this Agreement, Confidential
Information of GM shall mean GM Confidential Information and Confidential
Information of Magic shall mean Magic Confidential Information.
7.1.2. RESTRICTED DISCLOSURE. Each Party shall not use for its own
benefit or the benefit of any third party, or disclose, publish, release,
transfer or otherwise make available to any third party, any Confidential
Information of the other Party without the other Party's prior written consent.
Each of GM and Magic, however, shall be permitted to disclose Confidential
Information of the other to contractors and third parties, and its accountants,
attorneys and other agents and its affiliates or subsidiaries to the extent such
disclosure is reasonably necessary for the performance of its duties and
obligations hereunder or, with respect to GM, its use and enjoyment of the
OnStar System and OnStar Service, provided, however, that each of Magic and GM
shall be responsible for any violation of the confidentiality obligations set
forth herein by any of the foregoing. Each Party's obligations under this
Agreement as to non-tangible Confidential Information shall expire after a
period of [**] from the date of disclosure of such non-tangible Confidential
Information, except as with regard to non-tangible Confidential Information
related to Source Code of Magic delivered to GM under Section 2.6.2 or under
Section 3.2 or related to Source Code of GM delivered to Magic under Section
2.7.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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7.1.3. EXCLUSIONS. The obligations in this Section 7.1 shall not
restrict any disclosure of Confidential Information received by one Party (the
"Receiving Party") from the other Party (the "Disclosing Party") where the
Receiving Party can demonstrate that: (a) such Confidential Information was
independently developed by the Receiving Party prior to its receipt thereof
without violating its obligations hereunder or any of the Disclosing Party's
proprietary rights; (b) such Confidential Information is or becomes publicly
known (other than through unauthorized disclosure by the Receiving Party); (d)
such Confidential Information was already known to the Receiving Party prior to
its receipt thereof without any obligation of confidentiality; (e) such
Confidential Information is received by the Receiving Party from a third party
without any obligation of confidentiality; or (f) the Receiving Party is
required to do so pursuant to any applicable law (provided that the Receiving
Party shall provide reasonable prior written notice to the Disclosing Party of
such disclosure).
7.1.4. DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, "Confidential Information" of a Party means the information and
documents identified in this Agreement as confidential information of such
Party, as well as any and all other information that (i) such Party considers to
be confidential or proprietary to its business (including trade secrets,
technical information relating to ongoing research and development, business
strategies, marketing plans, customer lists, and financial data) and (ii) either
(A) is clearly labeled or identified as confidential or proprietary when
disclosed to the other Party or (B) the other Party knew, or under the
circumstances, should have known, was considered confidential or proprietary by
the disclosing Party.
7.1.5. NON-PROPRIETARY KNOW-HOW. For the avoidance of doubt neither
GM nor Magic shall be prevented from making use of know-how and principles
learned or experience gained of a non-proprietary and non-confidential nature.
8. REPRESENTATIONS AND WARRANTIES
8.1. BY GM. GM represents and warrants as follows:
8.1.1. CORPORATE AUTHORITY. GM is as an organization duly
incorporated, validly existing and in good standing, and has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Agreement. GM is duly licensed, authorized or qualified to do business
and is in good standing in every jurisdiction in which a license, authorization
or qualification is required for the ownership or leasing of its assets or the
transaction of business of the character transacted by it except where the
failure to be so licensed, authorized or qualified would not have a material
adverse effect on GM's ability to fulfill its obligations under the Agreement.
The execution, delivery and performance of the Agreement have been duly
authorized by GM.
8.1.2. COMPLIANCE WITH LAWS AND REGULATIONS. GM shall comply with
all applicable laws and regulations applicable to GM and shall obtain all
applicable permits and licenses required of GM in connection with its
obligations under the Agreement. GM has not made any unauthorized disclosure of
any Magic Confidential Information.
8.1.3. NO INFRINGEMENT OR MISAPPROPRIATION. GM Background
Technology and all Improvements made by GM thereto during the term of this
Agreement do not and will not infringe upon the proprietary rights of any third
party (except as may have been caused by a
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modification by Magic or Magic agents, contractors or suppliers or Magic's or
Magic agents', contractors' or suppliers' combination, operation or use with
devices, data or programs furnished by Magic.).
8.1.4. RIGHT TO GRANT LICENSES. GM has the right to grant to Magic
any license to use the GM software and data utilized by Magic pursuant to the
Agreement.
8.2. BY MAGIC. Magic represents and warrants as follows:
8.2.1. CORPORATE AUTHORITY. Magic is an organization duly
incorporated, validly existing and in good standing, and has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Agreement. Magic is duly licensed, authorized or qualified to do
business and is in good standing in every jurisdiction in which a license,
authorization or qualification is required for the ownership or leasing of its
assets or the transaction of business of the character transacted by it except
where the failure to be so licensed, authorized or qualified would not have a
material adverse effect on Magic's ability to fulfill its obligations under the
Agreement. The execution, delivery and performance of the Agreement have been
duly authorized by Magic.
8.2.2. COMPLIANCE WITH LAWS AND REGULATIONS. Magic shall comply
with all laws and regulations applicable to Magic where failure to do so would
have a material adverse effect on GM's business or on the services. Magic has
not made any unauthorized disclosure of any GM Confidential Information.
8.2.3. NO INFRINGEMENT OR MISAPPROPRIATION. Magic's Background
Technology, any Improvements made by Magic thereto, and the OnStar Service and
any other work product under this Agreement and any modifications to GM
Background Technology performed by Magic will not: (i) infringe upon the patent,
copyright, database right or trademark rights of any third party; or (ii)
misappropriate the trade secret or intellectual property rights of any third
party provided that the warranty stated in this sub-section 8.2.3 will not apply
to infringements or misappropriations as may result from modifications by GM or
GM's contractors or suppliers or GM's or GM contractors' or suppliers'
combination, operation or use with devices, data or programs furnished by GM, or
modifications by Magic on GM's specific request so long as Magic has made
reasonable efforts to ensure that this sub-section 8.2.3 has been complied with.
GM's sole and exclusive remedy for any failure by Magic under this Sub-Section
8.2.3 is as provided under Section 9.2.
8.2.4. RIGHT TO GRANT LICENSES. Magic has the right to grant to GM
any license provided under the Agreement. GM's sole and exclusive remedy for any
failure by Magic under this Sub-Section 8.2.4 is as provided under Section 9.2.
8.3. YEAR 2000.
8.3.1. All Magic Background Technology, OnStar Services,
Improvements by Magic (not including GM Background Technology and Improvements
by GM) must be fully Year 2000 Compliant except as specified herein or by GM.
With respect to Magic's third party software used in or with the OnStar Service,
Magic shall use all reasonable efforts: (i) to obtain from the third-party Magic
a warranty consistent with the warranty set forth in this Section 8.3; and (ii)
to validate that such software is Year 2000 Compliant before using such software
in connection with this Agreement. If Magic is unable to obtain such a warranty
for any such third-party software, Magic shall promptly notify GM and shall
promptly undertake to test such third-
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party software using, at a minimum, GM's Year 2000 Compliance Test Procedure, or
any comparable procedure approved by GM. If such Magic third-party software
fails the Year 2000 Compliance Test Procedure, GM shall have the option to do
one of the following: (i) reject such Magic third-party software and pursue
other alternatives; or (ii) require Magic to install enhancements or upgrades to
such Magic third-party software to render it Year 2000 Compliant.
8.3.2 To be "Year 2000 Compliant" the OnStar Service, software and
hardware must at all times before, during, and after January 1, 2000, accurately
process and handle date and time data (including, but not limited to,
calculating, comparing and sequencing) from, into, and between the twentieth and
twenty-first centuries, and the years 1999 and 2000, including leap year
calculations, to the extent that other information technology used in
combination with OnStar Service, software and hardware properly exchange
date/time data with it. To the extent any OnStar Service, software and hardware
must perform together with any other system, software or hardware, as set forth
in this Agreement, such OnStar Service, software and hardware, when used
together with such system, software or hardware, must properly exchange
date/time data with such system, software or hardware in accordance with the
foregoing warranty.
8.4 DISCLAIMER. EXCEPT AS SET FORTH IN SECTION 8.1 AND SECTION 8.2,
NEITHER GM NOR MAGIC MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES IN RESPECT OF
ITS BACKGROUND TECHNOLOGY AND IMPROVEMENTS AND EACH EXPLICITLY DISCLAIMS ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY, SATISFACTORY QUALITY AND FITNESS FOR A PARTICULAR PURPOSE IN
RESPECT OF THE SERVICES, THE SOFTWARE OR THE HARDWARE. MAGIC MAKES NO WARRANTY
AS TO THE RESULTS THAT MAY BE OBTAINED FROM USE OF THE ONSTAR SERVICE OR THE
ACCURACY OR RELIABILITY OF ANY TRANSACTIONS CONDUCTED OR INFORMATION, GOODS OR
SERVICES OBTAINED THROUGH THE ONSTAR SERVICE (INCLUDING CONTENT PROVIDED BY
THIRD PARTIES). MAGIC'S SUPPLIERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS AND IMPLIED.
9. INDEMNIFICATION AND LIABILITIES
9.1 INDEMNITY BY GM. GM shall indemnify Magic, and its successors and assigns
and its officers, directors, employees, subcontractors, consultants,
representatives and agents, from and against any and all losses, damages,
injuries (including death), causes of action, claims, penalties, interest,
additional taxes, demands and expenses, including reasonable legal fees and
expenses, of any kind or nature arising out or on account of, or resulting from,
any claim or allegation of a third party: (i) that GM's Background Technology
and Improvements made by GM thereto provided to Magic by GM under this Agreement
infringe upon or misappropriate the proprietary rights of any third party
(except as may have been caused by a modification by Magic or Magic's
contractors or suppliers or Magic's or Magic's contractors' or suppliers'
combination, operation or use with devices, data or programs furnished by
Magic); (ii) relating to the inaccuracy or untruthfulness of any representation
or warranty made by GM under this Agreement; (iii) relating to GM's failure to
obtain GM consents; (iv) relating to any liability of
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Magic arising out of GM's failure to comply with any relevant data protection or
similar legislation in any jurisdiction where the services under this agreement
are being provided or which data is being transported/transmitted or Magic's
failure so to comply to the extent that such failure was caused by GM's
negligent acts or omissions; and (v) relating to any duties or obligations to GM
contractors or suppliers under this Agreement. GM will include in its subscriber
agreements a disclaimer of liability of General Magic to the subscriber (this
disclaimer may be in the form of a disclaimer of all suppliers) and GM will
indemnify Magic against any third party claims arising from GM's not placing
this clause in any subscriber agreements. GM shall indemnify Magic from any
costs and expenses incurred in connection with the enforcement of this Section
9.1.
9.2 INDEMNITY BY MAGIC. Magic shall indemnify GM, its successors and
assigns and its officers, directors, employees, subcontractors, consultants,
representatives and agents, from and against any and all losses, damages,
injuries (including death), causes of action, claims, penalties, interest,
additional taxes, demands and expenses, including reasonable legal fees and
expenses, of any kind or nature arising out or on account of, or resulting from,
any claim or allegation of a third party: (i) that the OnStar Background
Technology and Improvements made by Magic thereto under this Agreement, any
modifications to GM Background Technology and Improvements performed by Magic
pursuant to this Agreement infringe upon or misappropriate the proprietary
rights of any third party (except as may have been caused by a modification by
GM or GM's contractors or suppliers or GM's or GM's contractors' or suppliers'
combination, operation or use with devices, data or programs furnished by GM);
(ii) relating to inaccuracy or untruthfulness of any representation or warranty
made by Magic under this Agreement, except as otherwise specified in this
Agreement; (iii) relating to Magic's failure to obtain Magic consents; (iv)
relating to non-compliance by Magic with third party agreements; (v) relating to
any liability of GM arising out of Magic's failure to comply with any relevant
data protection or similar legislation in any jurisdiction where the services
under this Agreement are being provided or which data is being
transported/transmitted or GM's failure so to comply to the extent that such
failure was caused by Magic's negligent acts or omissions; and/or (vii) relating
to Magic's failure to implement physical or data security controls imposed by
the Agreement. Magic shall indemnify GM from any costs and expenses incurred in
connection with the enforcement of this Section 9.2.
9.3 CROSS-INDEMNITY. Each of GM and Magic shall indemnify, defend and
hold harmless the other Party, its directors, officers and employees, from any
and all claims, actions, damages, liabilities, costs and expenses, including
reasonable attorneys' fees and expenses, for: (i) the death or personal injury
of third parties, including invitees or employees of the indemnitor, arising out
of, or in any way resulting from, the gross negligence or willful acts or
omissions of the indemnitor or any of its agents, employees or representatives;
and/or (ii) the damage, loss or destruction of real or tangible personal
property of the other Party or third parties, including invitees or employees of
the indemnitor, arising out of, or in any way resulting from, the gross
negligence or willful acts or omissions of the indemnitor or its agents,
employees or representatives. The Indemnifying Party shall indemnify the
Indemnified Party from any costs and expenses incurred in connection with the
enforcement of this Section 9.3.
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9.4 INFRINGEMENT. In the event of any claim pursuant to Section 8.2.3 or
Section 9.2(i), or if in GM's and Magic's jointly agreed opinion, any software
provided by or through Magic is likely to become the subject of any such claim,
then GM shall do one of the following.
9.4.1 RIGHT TO CONTINUE USE (GM). GM shall, at Magic's request,
attempt to obtain the right to continue to use the software in question on
reasonable commercial terms, such terms to be agreed by Magic. If so obtained,
then Magic shall reimburse GM the costs of obtaining or securing the continued
right to use such software.
9.4.2 RIGHT TO CONTINUE USE (MAGIC), MODIFICATION OR SUBSTITUTION.
If (1) above does not apply either due to GM's failure to obtain the right to
continue to use the software in question after reasonably diligent effort or
Magic's reasonable failure to agree to such terms, then Magic shall (in its
discretion): (i) obtain the right to continue the use of the software in
question; (ii) modify the software in question so that it does not infringe but
remains equivalent; or (iii) substitute equivalent, non-infringing items for the
software in question, or substitute non-infringing items for the software
without material loss of functionality. The costs relating to Magic providing
any of (i), (ii) and (iii) above shall be borne by GM unless Magic is proven to
be in breach of warranty pursuant to Section 8.2.3 or a claim is made by GM
pursuant to Section 9.2(i). This provision is without prejudice to GM's and/or
Magic's rights to any claim for any amounts due relating to any breach of
warranty pursuant to this Article 9.
9.5 INDEMNIFICATION PROCEDURES. If any civil, criminal, administrative
or investigative action or proceeding (each, a "Claim") is commenced against a
Party entitled to indemnification under Section 9.1, Section 9.2 or Section 9.3
(an "Indemnified Party"), notice thereof shall be given to the Party that is
obligated to provide indemnification (the "Indemnifying Party") as promptly as
practicable. After such notice, if the Indemnifying Party shall acknowledge in
writing to such Indemnified Party that the Agreement applies with respect to
such Claim, then the Indemnifying Party shall be entitled, if it so elects, in a
notice delivered to the Indemnified Party not less than 10 days prior to the
date on which a response to such Claim is due, to immediately take control of
the defense and investigation of such Claim and to employ and engage attorneys
of its sole choice to handle and defend the same, at the Indemnifying Party's
sole cost and expense. The Indemnified Party shall cooperate in all reasonable
respects with the Indemnifying Party and its attorneys in the investigation,
trial and defense of such Claim and any appeal arising therefrom; provided,
however, that the Indemnified Party may, at its own cost and expense,
participate, through its attorneys or otherwise, in such investigation, trial
and defense of such Claim and any appeal arising therefrom. No settlement of a
Claim that involves a remedy other than the payment of money by the Indemnifying
Party shall be entered into without the written consent of the Indemnified
Party. After notice by the Indemnifying Party to the Indemnified Party of its
election to assume full control of the defense of any such Claim, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
expenses incurred thereafter by such Indemnified Party in connection with the
defense of that Claim.
If the Indemnifying Party does not assume full control over the defense
of a Claim subject to such defense as provided in this Section 9.5, the
Indemnifying Party may participate in such defense, at its sole cost and
expense, and the Indemnified Party shall have the right to defend the Claim in
such manner as it may deem appropriate, at the cost and expense of the
Indemnifying Party.
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9.6 DIRECT DAMAGES. Neither GM nor Magic shall be liable to the other
Party for any direct damages arising out of or relating to its performance under
the Agreement, whether based on an action or claim in contract, equity,
negligence, tort or otherwise, for all events, acts or omissions, in an amount
to exceed in the aggregate an amount equal to [**] pursuant to this Agreement.
The following (without limitation) shall be considered direct damages and
neither party shall assert that they are consequential damages pursuant to
Section 9.7 to the extent they result from a party's failure to provide the
Services in accordance with the Agreement:
(i) costs and expenses of recreating or reloading any
of GM's lost, stolen or damaged information;
(ii) costs and expenses of implementing a work-around in
respect of Magic's or Magic contractors or
suppliers' failure to provide all or a portion of
the services or any part thereof;
(iii) costs and expenses of replacing lost, stolen or
damaged hardware, software, and materials;
(iv) costs and expenses incurred by GM to correct errors
in software maintenance and enhancements provided
as part of the services or any part thereof;
(v) costs and expenses incurred by GM to procure from
an alternate Magic, or to perform itself, all or
any part of services the performance of which is
the obligation of Magic hereunder, to the extent in
excess of Magic's charges under this Agreement;
(vi) straight time, overtime or related expenses
incurred by GM, including overhead allocations of
GM for GM's employees, wages and salaries of
additional employees, travel expenses, overtime
expenses, telecommunications charges and similar
charges, due to failure of Magic to provide all or
a portion of the services under this Agreement
incurred in connection with (1) through (6) above;
(vii) fines, penalties, assessments or other charges
incurred in connection with any of the above or
such failure; and
(viii) royalty or license fee damages for exceeding the
scope of the Field of Use of the License to GM
under Section 3.1 or for Magic's breaching the
Exclusivity provisions under Section 3.3.
To the extent any amount is paid to either party pursuant to this
Section 9.6, the payment shall be in United States currency.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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9.7 CONSEQUENTIAL DAMAGES. Neither GM nor Magic shall be liable for, nor
will the measure of damages include, any indirect, special or consequential
damages or amounts for loss of income, profits or savings arising out of or
relating to GM's or Magic's performance under the Agreement.
9.8 EXCLUSIONS. The exclusions of liability set forth in Section 9.6 and
Section 9.7 are not applicable to: (i) indemnification claims as set forth in
Section 9.1(i) and 9.2(i); (ii) Magic's liability arising out of Magic's failure
to comply with restrictions or laws governing User Data in this Agreement and
(iv) GM's liability arising out of failure to comply with laws governing User
Data.
9.9 INJUNCTIVE RELIEF. Both parties acknowledge and agree that a breach
of scope of any license granted hereunder or any data protection clause will
give rise to irreparable injury that is not adequately compensable in damages.
Accordingly, either Party may seek injunctive relief against such breach or
threatened breach in addition to any other legal and equitable remedies
available.
10. TERM AND TERMINATION
10.1. TERM. The initial term of this Agreement (unless earlier
terminated pursuant to Section 11.2 (Termination)) will be three (3) years
beginning on the Effective Date. GM will have a one-time right to renew this
Agreement for an additional one (1) year term by giving written notice of such
renewal to Magic at least ninety (90) days before the expiration of the initial
term. After the renewal term (if any), this Agreement may be extended only by
written agreement of the Parties.
10.2. TERMINATION
10.2.1. FOR MATERIAL BREACH. Magic will have the right to
terminate this Agreement for cause upon written notice to GM if (i) GM has
committed a Material Breach, and (ii) GM has not cured such Material Breach
within thirty (30) days after written notice of such Material Breach from Magic.
10.2.2. FOR FAILURE TO CLOSE EQUITY INVESTMENT. GM intends to
purchase from Magic, and Magic to sell to GM, Fifteen Million Dollars
($15,000,000) of Magic equity securities pursuant to a Series G Preferred Stock
Purchase Agreement being entered into concurrently with this Agreement (the
"Stock Purchase Agreement"). If the purchase and sale of Magic equity securities
pursuant to the Stock Purchase Agreement has not been consummated on or before
December 31, 1999, this Agreement will automatically terminate unless the
Parties otherwise agree in writing.
10.3. EFFECTS OF TERMINATION. Upon expiration or termination of this
Agreement, unless such termination is due to a Material Breach by GM or pursuant
to Section 11.2.2 (For Failure to Close Equity Investment), GM will have the
right to continue offering and providing the OnStar Service in the Field of Use,
and if Magic is still hosting and operating the OnStar Service at the time of
such termination, Magic will assist in the transition of the hosting and
operating of the OnStar Service to GM as provided in Section 3.5 (Transition to
GM) for a reasonable period of time up to ninety (90) days after such
termination. If this Agreement is
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terminated by Magic due to a Material Breach by GM, all licenses granted to GM
under or in connection with this Agreement will immediately terminate. Upon
expiration or termination of this Agreement for any reason and at any time, all
amounts owed to Magic under this Agreement will become immediately due and
payable and each Party will promptly return to the other Party or destroy all
copies of the other Party's Confidential Information that it does not have a
surviving right to use, and certify in writing to the other Party that it has
done so.
10.4. SURVIVAL. Sections 1 (Definitions), 4 (Ownership of Intellectual
Property Rights), 6.7 (Taxes), 6.8 (Payment Terms), 7 (Confidentiality), 8
(Warranties), 9 (Indemnification), 10 (Limitations of Liability), 11.3 (Effects
of Termination), 12 (Dispute Resolution), 13 (General) will survive the
expiration or termination of this Agreement for any reason. Upon payment of the
fees required by sections 6.1 and 6.5, Section 3.1 shall survive expiration or
termination of this Agreement for any reason.
11. DISPUTE RESOLUTION
11.1. ALTERNATIVE DISPUTE RESOLUTION. The Parties will attempt to settle
any claim or controversy arising from this Agreement through consultation and
negotiation in good faith and in a spirit of mutual cooperation. If those
attempts fail, then such dispute will be mediated by either Endispute/Judicial
Arbitration and Mediation Services ("JAMS") in New York, New York or another
mediator mutually acceptable to the parties. Any dispute that the Parties cannot
resolve through negotiation or mediation within thirty (30) days of the date of
the initial demand for negotiation by one of the Parties will be submitted to
binding arbitration, in accordance with Section 12.2 (Arbitration).
11.2. ARBITRATION
11.2.1. CHOICE OF FORUM AND VENUE. Except as set forth in Section
12.1 (Alternative Dispute Resolution), any dispute, controversy or claim arising
from or relating to this Agreement, or the breach, termination, or invalidity
thereof, will be settled by arbitration in New York, New York, in accordance
with the American Arbitration Association rules for complex commercial
arbitrations in effect on the Effective Date. The language of the arbitration
will be English. At the first arbitration hearing, the Parties will (i) agree on
the discovery schedule for the arbitration, (ii) arrange an acceptable procedure
for any law and motion proceedings and (iii) in all respects arrange for the
most expeditious hearing possible of the matters in dispute. The Parties shall
have the right to conduct the discovery only to the extent specifically
authorized by the arbitrator.
11.2.2. SELECTION OF ARBITRATORS. The Parties will choose, by
mutual agreement, one (1) neutral arbitrator to hear the dispute. If the Parties
cannot agree on the selection of the arbitrator within thirty (30) days after a
demand for arbitration has been served, the arbitrator will be selected by JAMS.
11.2.3. AWARD. The award will be made promptly by the arbitrator
and, unless otherwise agreed by the Parties, no later than thirty (30) days from
the date of closing of the hearing, or if oral hearings have been waived, from
the date of transmittal of final statements and proofs to the arbitrator. If the
arbitrator fails to reach a decision within thirty (30) days, the arbitrator
will be discharged, and a new arbitrator will be appointed and will proceed in
the same manner, and the process will be repeated until a decision is finally
reached. The arbitrator will
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be empowered to award only those damages that are permitted in this Agreement,
subject to the disclaimers of damages and liability limits set forth in this
Agreement, but the arbitrator will not have the authority to reform, modify or
materially change this Agreement. Judgment on the award may be entered in any
court having jurisdiction.
11.2.4. PROVISIONAL RELIEF. The arbitrator will have the
authority to issue interim orders for provisional relief, including orders for
injunctive relief, attachment or other provisional remedy, as necessary to
protect either Party's name, proprietary information, trade secrets, know-how,
or any other proprietary right. Any interim order of the arbitrator for any
injunctive or other preliminary relief will be enforceable in any court of
competent jurisdiction. In addition, nothing in this Agreement will be deemed as
preventing either Party from seeking provisional relief from any court of
competent jurisdiction in accordance with Section 14.4 (Injunctive Relief).
11.3. BINDING EFFECT. The award of the arbitrator will be final and
binding upon the parties without appeal or review except as permitted by New
York law. In connection with any application to confirm, correct or vacate the
arbitration award, any appeal of any order rendered pursuant to any such
application, or any other action required to enforce the arbitration award, the
prevailing party will be entitled to recover its reasonable attorneys' fees,
disbursements and costs incurred in any post-arbitration award activities.
12. GENERAL
12.1. RELATIONSHIP OF PARTIES. Nothing in this Agreement will be
construed as creating any agency, partnership, or other form of joint enterprise
between the Parties. Neither Party will have the authority to act or create any
binding obligation on behalf of the other Party, and neither Party will
represent to any third party that it has the authority to act or create any
binding obligation on behalf of the other Party.
12.2. NOTICES. All notices, consents, waivers, and other communications
intended to have legal effect under this Agreement must be in writing, must be
delivered to the other Party at the address set forth at the top of this
Agreement by personal delivery, certified mail (postage pre-paid), or a
nationally recognized overnight courier, and will be effective upon receipt (or
when delivery is refused). Any such notices sent to Magic must be addressed to
the attention of its General Counsel. Each Party may change its address for
receipt of notices by giving notice of the new address to the other Party.
12.3. GOVERNING LAW. This Agreement will be governed by and interpreted
in accordance with the laws of the State of New York excluding any conflict of
law provisions which would require application of another choice of law.
12.4. INJUNCTIVE RELIEF. It is understood and agreed that,
notwithstanding any other provision of this Agreement, any breach of Section
4.11 (Proprietary Rights Protection), Article 7 (Confidentiality Obligations) or
Section 12.10 (Nonsolicitation) by either Party will cause irreparable damage
for which recovery of money damages would be inadequate, and that the
non-breaching Party will therefore be entitled to seek timely injunctive relief
to protect such Party's rights, in addition to any and all remedies available at
law.
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12.5. WAIVER. The failure of either Party to require performance by the
other Party of any provision of this Agreement will not affect the full right to
require such performance at any time thereafter; nor will the waiver by either
Party of a breach of any provision of this Agreement be taken or held to be a
waiver of the provision itself.
12.6. SEVERABILITY. If any provision of this Agreement is unenforceable
or invalid under any applicable law or is so held by applicable court decision,
such unenforceability or invalidity will not render this Agreement unenforceable
or invalid as a whole, and such provision will be changed and interpreted so as
to best accomplish the objectives of such unenforceable or invalid provision
within the limits of applicable law or applicable court decisions.
12.7. ASSIGNMENT. Neither this Agreement nor any rights or obligations
of either Party under this Agreement may be assigned in whole or in part without
the prior written consent of the other Party except (a) Magic may assign this
entire Agreement in connection with a merger or sale of all or substantially all
of its business or assets to a third party that agrees in writing to assume this
Agreement, and (b) GM may assign any or all of its rights under this Agreement
to any of its Affiliates. Any attempted assignment in violation of the preceding
sentence will be void. This Agreement will bind and inure to the benefit of the
respective successors and permitted assigns of the Parties.
12.8. FORCE MAJEURE. Neither Party will be liable for any failure to
fulfill its obligations hereunder due to causes beyond its reasonable control,
including acts of God, fire, explosion, vandalism, cable cut, storm, extreme
temperatures, earthquake, or other similar catastrophes; any law, order,
regulation, direction, action, or request of the United States government, or of
any other government, including state and local governments, having jurisdiction
over either of the Parties, or of any department, agency, commission, court,
bureau, corporation, or other instrumentality of any such government or of any
civil or military authority; national emergencies, insurrection, riots, wars, or
strikes, lock-outs, work stoppages, or other labor difficulties; actions or
inactions of a third party provider or operator of facilities employed in
provision of the OnStar Service; or any other conditions or circumstances beyond
the reasonable control of such Party which impede or affect the OnStar Service
or the transmission of telecommunications services.
12.9. PUBLICITY. Upon execution of this Agreement the Parties will issue
a joint press release in the form of Exhibit E (Press Release). Any further
press releases or public announcements or statements by either Party concerning
this Agreement or the relationship between the Parties must be approved in
advance by both Parties, except each party shall be entitled, without the prior
approval of the other party, to make any press release or other public
disclosure with respect to such transaction as is required by applicable law and
regulations (although such other party shall be consulted in connection with any
such press release or other public disclosure prior to its release and shall be
provided a copy thereof).
12.10. NON-SOLICITATION. During the term of this Agreement and for [**]
thereafter, [**] neither Party may solicit, directly or indirectly, any employee
of the other Party, or hire, as an employee or independent contractor or
otherwise, any person who at that time is, or who in the preceding [**] was, an
employee of the other Party. It is understood that general employment
advertisements not targeted at the other Party's employees will not constitute a
breach of this Section 14.10.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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12.11. CONSTRUCTION. The section headings appearing in this Agreement
are inserted only as a matter of convenience and in no way define, limit,
construe, or describe the scope or extent of such section or in any way affect
this Agreement. Unless otherwise expressly stated, when used in this Agreement
the word "including" means "including but not limited to." Each Party represents
that it has had the opportunity to participate in the preparation of this
Agreement and hence the Parties agree that the rule of construction that
ambiguities be resolved against the drafting party will not apply to this
Agreement.
12.12. ENTIRE AGREEMENT AND AMENDMENT. This Agreement together with the
Exhibits completely and exclusively states the agreement of the Parties
regarding its subject matter. It supersedes, and its terms govern, all prior
understandings, agreements, or other communications between the parties, oral or
written, regarding such subject matter. This Agreement may be executed in
counterparts and may be amended only in a document signed by both Parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
GENERAL MOTORS CORPORATION GENERAL MAGIC, INC.
By: /s/ X.X. Xxxxx By: /s/ Xxxxxx Xxxxxxx
----------------------------------------- --------------------------
Name: X.X. Xxxxx Name: Xxxxxx Xxxxxxx
--------------------------------------- ------------------------
Title: Executive Director, OnStar Title: CEO
------------------------------------ ----------------------
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EXHIBIT A
DELIVERABLES, SPECIFICATION AND SCHEDULE
28
OnStar Virtual Advisor - Service Descriptions
The information provided in this attachment will be superceded within thirty
(30) days, from contract execution, by a detailed statement of work. The
products, services and behaviors described in this attachment are indicative of
the required functionality at production launch
(anticipated [**]).
The majority of information shown below was previously provided to General Magic
during consultative meetings held at OnStar in Troy, MI during the week of
October 3, 1999.
The product and service offerings described herein represent custom development.
They may be developed through modifications of existing General Magic property.
CONSUMER CONCEPT STATEMENT
[**]?
[**].
[**].
ACTIVATION OF THE VIRTUAL ADVISOR
The subscriber activates the Virtual Advisor [**] the system. The subscriber
will then [**]. The spoken command [**]. After the subscriber [**].
GENERAL
- Ask for [**].
- This action will [**] site. The subscriber will [**].
PRELIMINARY SERVICE DESCRIPTIONS
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- Ask for [**].
- Obtain [**].
- Ask for [**].
- Obtain [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] Obtain [**]. Use the [**].
- [**] is defined as:
[**]
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- Ask for [**].
- Obtain [**].
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
30
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
[**] covered will be:
[**]
[**]
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
- Goal is to [**]
- Future of [**]
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- Ability to [**]
- Ability to [**]
- Ability to [**]
[**]
- Subscriber has [**].
- Service will [**].
- Service will [**].
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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- System will [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
- Ask for [**].
- Obtain [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- Ability to [**]
- Ability to [**]
[**]
- The Virtual Advisor is to provide [**].
[**]
[**]
[**]
- All dialogues are [**].
- General Magic will [**].
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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MIGRATION PLANNING
- Concurrent with the proposed product development activity, General Magic
will contribute to a multi-disciplinary team whose [**] will be planning for
and [**] will be the support for the [**] to operate [**] enterprise
application architecture and be physically [**] within [**]. These tasks
will include:
[**]
[**]
[**]
[**]
[**]
[**]
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
33
EXHIBIT B
SOURCE CODE ESCROW AGREEMENT
34
ESCROW AGREEMENT
This ESCROW AGREEMENT is entered into this __ day of __________, 1999, by and
among General Magic, Inc., a corporation organized and existing under the laws
of the State of Delaware, and having its principal offices at 000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (hereinafter the "COMPANY"); General Motors
Corporation, a corporation organized and existing under the laws of the State of
Delaware and having its principal offices at 0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxxxx,
Xxxxxxxx (hereinafter "GM"); and ______________ , a corporation organized and
existing under the laws of the State of _______________ and having its principal
offices at _________________ (hereinafter the "Escrow Agent").
WITNESSETH:
WHEREAS, COMPANY and the GM have entered into a Development and License
Agreement (the "License Agreement") dated November 9, 1999, a copy of which is
attached hereto as Exhibit A and incorporated herein by reference, pursuant to
which, among other things, COMPANY will develop for and license to GM a
customized version of its Portico virtual assistant service on the terms and
conditions set forth in the License Agreement; and
WHEREAS, the License Agreement provides that COMPANY and GM will enter into an
escrow agreement providing for deposit by COMPANY of the Source Code and related
documentation for the Magic Software (as each term is defined in the License
Agreement) with an escrow agent, and for release of that Source Code to GM upon
the occurrence of certain events specified in Section 3.2 of the License
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein and for other
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, COMPANY, GM and the Escrow Agent hereby agree as follows:
1. APPOINTMENT. GM and the COMPANY hereby appoint Escrow Agent as the
escrow holder under this Escrow Agreement, and the Escrow Agent
accepts such appointment on the terms and conditions set forth in this
Escrow Agreement.
2. DEPOSIT. Within thirty (30) days following execution of this Escrow
Agreement, the COMPANY shall deliver to the Escrow Agent two (2)
copies of the Source Code for the Magic Software (as such terms are
defined in the License Agreement), consisting of a full source
language statement of the program or programs comprising the Magic
Software, and all existing program maintenance documentation,
including all flow charts, schematics and annotations which comprise
the precoding detailed design specification, and all other material
necessary to allow a reasonably skilled third party programmer or
analyst to maintain or enhance the
35
Magic Software without the help of any other person or reference to
any other information (collectively, the "Escrow Materials"). The
COMPANY shall promptly supplement the Escrow Materials with the Source
Code and related documentation for all Updates (as defined in the
License Agreement).
3. RECEIPT BY ESCROW AGENT. The Escrow Agent shall acknowledge receipt of
each deposit of Escrow Materials received from COMPANY by sending
written acknowledgement thereof to both GM and COMPANY.
4. RECORDS. The Escrow Agent will keep complete written records of the
activities undertaken and the materials prepared and delivered to the
Escrow Agent pursuant to this Escrow Agreement. COMPANY and GM will
each be entitled at reasonable times during normal business hours, and
upon reasonable notice to the Escrow Agent, to inspect the records of
the Escrow Agent with respect to the Escrow Materials.
5. STORAGE AND SECURITY.
(a) The Escrow Agent shall act as custodian of the Escrow Materials
until the escrow is terminated pursuant to Section 16 of this
Escrow Agreement. The Escrow Agent shall establish, under its
control, a secure receptacle for the purpose of storing the
Escrow Materials; provided, however that the Escrow Agent's
obligation for safekeeping shall be limited to providing the same
degree of care for the Escrow Materials as it maintains for its
valuable documents and those of its customers lodged in the same
location with appropriate atmospheric or other safeguards.
Notwithstanding the foregoing, the parties acknowledge and agree
that the Escrow Agent shall not be responsible for any loss or
damage to any of the Escrow Materials due to changes in such
atmospheric conditions (including, but not limited to, failure of
the air conditioning system), unless such changes are proximately
caused by the gross negligence or malfeasance of the Escrow
Agent.
(b) The Escrow Materials deposited with the Escrow Agent by COMPANY
shall remain the exclusive property of COMPANY.
(c) Except as otherwise provided in this Escrow Agreement, the Escrow
Agent agrees that: (i) it shall not divulge, disclose or
otherwise make available to any party other than COMPANY, or make
any use whatsoever of, the Escrow Materials; (ii) it shall not
permit any person access to the Escrow Materials, except such
2
36
authorized representatives of the Escrow Agent as may require
access to the Escrow Materials to perform the functions of the
Escrow Agent under this Escrow Agreement; (iii) access to the
Escrow Materials by COMPANY shall be granted by Escrow Agent only
to those persons duly authorized in writing by a competent
officer of COMPANY; and (iv) access to the Escrow Material shall
not be granted without compliance with all security and
identification procedures instituted by the Escrow Agent.
(d) The Escrow Agent shall have no obligation or responsibility to
verify or determine that the Escrow Materials deposited with
Escrow Agent by COMPANY do in fact consist of those items which
COMPANY is obligated to deliver under the License Agreement, and
the Escrow Agent shall bear no responsibility whatsoever to
determine the existence, relevance, completeness, currency or
accuracy of the Escrow Materials.
(e) The Escrow Agent's sole responsibility shall be to accept, store
and deliver the Escrow Materials deposited with it by COMPANY in
accordance with the terms and conditions of this Escrow
Agreement.
6. RELEASE EVENTS.
(a) The Escrow Agent is hereby specifically authorized to provide the
Escrow Materials to GM on the fifth day following written notice
from GM (a "Release Notice") certifying that one or more of the
release events specified in Section 3.2 ("Release Events") of the
License Agreement has occurred, provided that the Escrow Agent
has not received a notarized affidavit executed by an executive
officer of COMPANY certifying that no such event has occurred (a
"Notice of Objection"). A Release Notice must identify which
Release Event has occurred. GM shall provide the COMPANY by
certified mail, return receipt requested, a copy of any Release
Notice delivered to the Escrow Agent pursuant hereto. COMPANY
shall provide GM by certified mail, return receipt requested, a
copy of any Notice of Objection delivered to the Escrow Agent
pursuant hereto.
(b) If the Escrow Agent receives a timely Notice of Objection, the
Escrow Agent shall not release the Escrow Materials, but shall
continue to hold them pursuant to this Escrow Agreement until
otherwise jointly directed by COMPANY and GM, or until resolution
of the dispute pursuant to Section 7 ("Arbitration") of this
Escrow Agreement.
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37
7. ARBITRATION. If, subsequent to delivery of a Release Notice to the Escrow
Agent pursuant to Section 6, any dispute arises concerning the delivery of
the Escrow Materials to General Magic by the Escrow Agent, such dispute
will be settled by binding arbitration in New York, New York before a
single arbitrator in accordance with the rules of the American Arbitration
Association. The parties shall use diligent efforts to commence the
arbitration proceeding within ten (10) business days following deliver of
the Notice of Objection. The sole question shall be whether a Release Event
existed at the time a Release Notice was transmitted by GM to the Escrow
Agent. If the arbitrator determines that a Release Event has occurred, the
arbitrator shall enter an award directing that the Escrow Materials be
released to GM. If the arbitrator determines that a Release Event has not
occurred, the arbitrator shall direct the Escrow Agent to continue to hold
the Escrow Materials in accordance with this Escrow Agreement. The
arbitrator shall not have the power to enter any other award or finding,
except that arbitrator may award the prevailing party the fees of the
American Arbitration Association and the reasonable attorneys' fees and
costs incurred by it in the arbitration. The arbitrator shall render an
award within fifteen (15) days after the end of the hearing, and judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction.
8. BANKRUPTCY. GM and COMPANY acknowledge that this Escrow Agreement is an
"agreement supplementary to" the License Agreement as provided in Section
365(n) of Xxxxx 00, Xxxxxx Xxxxxx Code ("Bankruptcy Code"). COMPANY
acknowledges that if COMPANY, as a debtor in possession or a trustee in
bankruptcy in a case under the Bankruptcy Code, rejects the License
Agreement or this Escrow Agreement, GM may elect to retain its rights under
the License Agreement and this Escrow Agreement as provided in Section
365(n) of the Bankruptcy Code. Neither COMPANY nor such bankruptcy trustee
will interfere with the rights of GM as provided in the License Agreement
and this Escrow Agreement, including the right to obtain the Escrow
Materials.
9. LIMITATION ON ESCROW AGENT'S RESPONSIBILITY AND LIABILITY
(a) The Escrow Agent will incur no liability for acting upon any
instruction, notice, direction or other document believed by it in
good faith to be genuine and to have been made, signed, sent or
presented by the person or persons authorized to perform such act
under the terms of this Escrow Agreement.
4
38
(b) COMPANY and GM jointly and severally agree to indemnify the Escrow
Agent from and against any and all third party liabilities, claims,
suits and other proceedings, all judgments and other awards against
the Escrow Agent in connection therewith, and all costs and expenses
incurred in connection with the defense thereof, in each case which
may be imposed on, or incurred by, or asserted against, the Escrow
Agent in any way relating to, or arising out of, this Escrow
Agreement, provided that neither COMPANY nor GM shall be liable for
that portion of any such indemnification amount resulting from the
Escrow Agent's gross negligence or willful misconduct or violation by
the Escrow Agent of any terms or provisions of this Escrow Agreement.
10. NOTICES. All notices, instructions, deliveries, and other communications
required or permitted to be given hereunder or necessary or convenient in
connection herewith shall be in writing and must be delivered to the
intended recipient at the address set forth above (or at such other address
as a party shall designate pursuant to the terms hereof) by personal
delivery, certified mail (postage prepaid), or a nationally recognized
overnight courier, and will be effective upon receipt (or when delivery is
refused).
11. ENTIRE AGREEMENT. This Escrow Agreement sets forth the entire understanding
of the parties hereto with respect to the subject matter hereof.
12. WAIVER, AMENDMENT OR MODIFICATION; SEVERABILITY. This Escrow Agreement
shall not be waived, amended, or modified except by the written agreement
of all the parties hereto. Any invalidity, in whole or in part, of any
provision of this Escrow Agreement shall not affect the validity of any
other of its provisions.
13. GOVERNING LAW. This Escrow Agreement shall be governed by the laws of the
State of New York, without reference to conflict of laws principles.
14. RESIGNATION/REPLACEMENT.
(a) Upon sixty (60) days' prior written notice given to COMPANY and GM,
the Escrow Agent may resign. Within fifteen (15) days after the giving
of such notice, COMPANY and GM shall mutually designate a successor
Escrow Agent. Such successor Escrow Agent shall be bound by the terms
and provisions of this Escrow Agreement. In the event that no such
agreement is reached within such fifteen (15) day period, the Escrow
Agent shall continue to hold the Escrow Materials then held by it and
shall take no further actions and shall have no further
5
39
obligations hereunder except to cooperate with its successor in order
to effectuate the transfer of its duties to the successor Escrow
Agent.
(b) Upon notice, COMPANY and GM may replace the Escrow Agent with a
successor who shall replace Escrow Agent and be bound by all of the
terms of this Escrow Agreement.
15. ESCROW FEES. GM agrees to pay the fees of the Escrow Agent for its services
hereunder during he term of this Escrow Agreement. Such fees shall consists
of periodical escrow maintenance charges, at Escrow Agent's standard rates,
and fees charged for carrying out its duties hereunder.
16. TERM. This Escrow Agreement will be effective upon execution by all three
parties and will terminate only (a) if and when all of the Escrow Material
are delivered to GM pursuant to Section 8 ("Delivery of Escrow Material to
GM"); (b) upon or at any time after termination of the License Agreement by
COMPANY; or (c) if and when GM notifies COMPANY and the Escrow Agent that
GM desires to terminate this Escrow Agreement. Upon termination of this
Escrow Agreement pursuant to clause (b) or (c) above, the Escrow Agent will
return all copies of the Escrow Materials to the COMPANY.
17. COUNTERPARTS. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
duly executed as of the year and date first above written.
------------------------- --------------------------
COMPANY GM
-------------------------
ESCROW AGENT
40
EXHIBIT C
SECOND LEVEL CUSTOMER SUPPORT
[to be provided by Magic]
41
EXHIBIT D
SERVICE LEVELS
42
EXHIBIT E
PRESS RELEASE
43
Xxxx Xxxxxxxxx, General Magic Xxxx Xxxx, OnStar
1 + 000 000 0000 1 + 000 000 0000
xxxx.xxxxxxxxx@xxxxxxxxxxxx.xxx xxxx.xxxx@xxxxxx.xxx
ONSTAR AND GENERAL MAGIC SIGN AGREEMENT
TO PROVIDE VOICE ENABLED SERVICES IN VEHICLES
TROY, Mich., and SUNNYVALE, Calif. -- OnStar and General Magic today
announced that OnStar has agreed to take an equity stake of approximately $15
million in General Magic, makers of the innovative magicTalk. OnStar has
selected magicTalk as the voice user interface for the OnStar Virtual Advisor,
which will provide hands-free, voice-activated access to web-based information
services in vehicles. General Magic is expected to provide engineering, network
hosting and consulting services to OnStar as part of the ongoing relationship.
With the magicTalk core technology integrated into the OnStar Virtual
Advisor, OnStar subscribers will be able to access personalized information such
as e-mail, sports, weather, news and market headlines, all through easy-to-use
voice interactions.
"Our relationship with General Magic will allow us to launch our OnStar
Virtual Advisor services faster, and better meet the needs of our rapidly
expanding subscriber base," said Xxxx Xxxxx, general manager of OnStar. "General
Magic is the leader in technologies that allow people to use conversational
language to interact with voice-enabled services. Subscribers won't have to
memorize complex commands or become technology wizards to have web-based
services delivered in their vehicles."
44
OnStar and General Magic/Page 2
"The OnStar service is already very popular with consumers, and we are
delighted to work with OnStar to provide customers with the convenience of
voice-enabled access to web content and services," said Xxxxx Xxxxxxx. "We
believe voice-based services like the OnStar Virtual Advisor represent an
emerging new direction for consumer technology that will help people lead more
productive and enjoyable lives."
OnStar, the innovative safety, security and information service, uses
Global Positioning System (GPS) satellite technology and wireless communications
to link drivers and vehicles to the 24-hour OnStar Center for real-time,
personalized services.
OnStar will be included on nearly one million General Motors vehicles by
the end of 2000, dramatically increasing its subscriber base from the current
level of nearly 100,000. For more information, see xxxx://xxx.xxxxxx.xxx
General Magic offers voice-enabled services and technology that make
communication and access to information easy and convenient. The company's
innovative magicTalk voice interface product lets people interact with
information using their own words, as if they were talking to another person.
For more information about General Magic, visit the company's Web site at
xxxx://xxx.xxxxxxxxxxxx.xxx.
# # #
General Magic notes that this press release contains forward-looking statements.
There are risks and uncertainties that may cause actual results to vary
materially. These and other risk factors are detailed in General Magic's S-3,
filed (list current date when issued) with the Securities and Exchange
Commission.
45
EXHIBIT F
MODEL FOR HOSTING FEES
46
ONSTAR NOC MONTHLY COSTS
General Magic Confidential
-----SUBSCRIBER SCENARIOS-------
[**] [**] [**] [**]
ONSTAR BUSINESS PLAN ASSUMPTIONS:
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
ASSUMPTIONS FOR ESTIMATING [**]:
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**]
K$ [**] [**] [**] [**] [**] per [**]
[**] [**] [**] [**] [**] [**] servers per [**]
K$ [**] [**] [**] [**] [**] per server
[**] [**] [**] [**] [**] [**] servers per [**]
[**] [**] [**] [**] [**] [**] Isocor per [**]
K$ [**] [**] [**] [**] [**] per server [**]
[**] [**] [**] [**] [**] [**] servers per [**]
K$ [**] [**] [**] [**] [**] per server
[**] [**] [**] [**] [**] [**] servers per [**]
K$ [**] [**] [**] [**] [**] per server
Other misc servers & buildout (1)
K$ [**] [**] [**] [**] [**]
TOTAL CAPITAL [**] [**] [**] [**]
DEPREC PER MONTH [**] [**] [**] [**]
Other Monthly:
[**] [**] [**] [**] [**]
K$ [**] per month
[**] [**] [**] [**] [**] [**]
K$ [**] [**] [**] [**] [**] per quarter [**]
[**]
K$ [**] [**] [**] [**] primarily [**]
[**] [**] [**] [**] [**]
K$ [**] [**] [**] [**] approx [**] per service
TOTAL MONTHLY [**] [**] [**] [**] [**]
Total Per Min [**] [**] [**] [**]
