EXHIBIT 10.32
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
DISTRIBUTION AND LICENSING AGREEMENT
(CPU-Standard Point and Click/ With or Without Insert)
THIS AGREEMENT (the "Agreement"), effective as of October 1, 1996 (the
"Effective Date"), sets forth a distribution, licensing and joint promotional
program by and between Packard Xxxx NEC, Inc., with an address of 0000 Xxxxxx
Xxxxxx, Xxxxxxxx Xxxxx, XX 00000 ("MPC Manufacturer"), and Prodigy Services
Corporation, a Delaware corporation with an address of 000 Xxxxxxxx Xxxxxx,
Xxxxx Xxxxxx, X.X. 00000 ("Prodigy").
WHEREAS, the Prodigy lnternet Service is an interactive information,
communication and transactional service of Prodigy (the "Service," which shall
include the current and future versions of the Service, regardless of the
delivery platform(s), method(s), or media, now or hereafter selected by Prodigy,
at its sole discretion, during the term of this Agreement), and which Prodigy
provides to individuals and businesses authorized by Prodigy to use the Service
("Members");
WHEREAS, Prodigy designs, develops and licenses a line of computer software
known as the Prodigy Internet software (which, together with all enhancements,
revisions, versions, modifications, demonstration versions and regardless of the
hardware platform(s) used, is referred to herein as the "Software"), which, when
utilized in conjunction with the appropriate multimedia computer or personal
computer and modem, will enable Members to gain access to the Service; and
WHEREAS, Prodigy and PC Manufacturer desire (i) to terminate the distribution
and licensing agreement between Prodigy and PC Manufacturer (Contract Number
3744, which commenced January 1, 1994, as amended) and the distribution and
licensing agreement between Prodigy and NEC Technologies, Inc., whose business
related to personal computers was acquired by PC Manufacturer and as a result of
that acquisition, PC Manufacturer assumed NEC Technologies, Inc.'s rights and
obligations pursuant to its contract with Prodigy (Contract Number 6102, which
is dated June 23, 1995); and (ii) to enter into a joint promotional program to
increase the sales of their respective products and services;
NOW, THEREFORE, in consideration of the mutual promises and conditions contained
herein, and for good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, Prodigy and PC Manufacturer agree as follows:
1. TERM AND TERMINATION.
1.1 The term of this Agreement (the "Term") shall be one year from the
Effective Date and shall automatically renew for additional one year terms
unless earlier terminated as provided herein. Either party may terminate this
Agreement for any reason upon thirty (30) days' prior written notice. Either
party may terminate this Agreement immediately because of the other's material
breach of this Agreement, upon ten (10) days' written notice.
1.2 All obligations of the parties under Sections 3.6 and 3.10 (each for the
periods specified therein) and Sections 5, 6, 8, 9 and 10 shall survive
expiration or termination of this Agreement.
1.3 Notwithstanding anything to the contrary contained herein, upon termination
other than for breach by Packard Xxxx, Packard Xxxx may continue to distribute
its existing inventory of Product.
2. LICENSE GRANT.
2.1 Prodigy hereby grants to PC Manufacturer, and PC Manufacturer hereby
accepts from Prodigy during the Term, subject to the terms and conditions
contained herein, a non-exclusive license ("License"):
2.1.1 to pre-install a copy of the most current version of the Software
provided by Prodigy hereunder on the hard disk of certain of PC
Manufacturer's computers (each such computer onto which the Software has
been installed pursuant to this Agreement being a "Computer" and which may
include PC Manufacturer's computers sold under the NEC, Zenith Data Systems
and Packard Xxxx labels and any other labels agreed to by Prodigy) by
duplication from one or more Master Disk(s) (as defined in Section 3.1
below);
2.1.2 to market and distribute the Software, as installed in Computers
equipped with a minimum of 14.4 bps (28.8 recommended) internal modem (each
such Computer, together with the Software and modem being a "Package"), in
the United States and, upon written authorization by Prodigy, in those
countries in which access to the Service is available locally;
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2.1.3 to use and reproduce the "Prodigy(R) Internet xxxx, together with
such other trademarks and service marks of Prodigy or third parties
attached hereto as Attachment A (collectively, the "Trademarks"); and
2.1.4 to sublicense the Software to Third Party Distributors solely to
grant to such Third Party Distributors the right to market and distribute
the Software as included in Packages in accordance with Section 2.1.2, and
to sublicense to Third Party Distributors the right to use the Trademarks
solely in accordance with Section 2.1.3, all in accordance with the terms
and conditions set forth in this Agreement. For purposes of this Agreement,
a "Third Party Distributor" shall mean any entity who has the right,
pursuant to an agreement with PC Manufacturer that complies with and is
consistent with the applicable terms and conditions of this Agreement, to
distribute Packages to the public. The terms and conditions stated in this
Agreement shall apply to all sublicenses made hereunder during the Term.
2.2 PC Manufacturer agrees that the License does not permit PC Manufacturer to
use, copy, modify or reproduce, distribute, or make available the Software or
any other material provided or licensed hereunder except as expressly provided
in Section 2.1. Notwithstanding the foregoing, PC Manufacturer is licensed to
distribute the Software directly and through its third party service providers
to its customers if the media on which the Software was originally distributed
becomes corrupted or is defective. PC Manufacturer shall not make any changes
or modifications to the Software, and shall not decompile, disassemble, or
reverse engineer the Software.
3. OBLIGATIONS OF PRODIGY.
3.1 Prodigy shall provide to PC Manufacturer one or more master disk(s) (each a
"Master Disk"), which shall include the most current release of the Software, to
be used by PC Manufacturer for hard disk installation of the Software under
Section 2.1.1 above. Prodigy shall have the right, in its sole discretion, at
any time, to modify any technical specifications or other technical matters
relating to the installation and/or operation of the Software, including the
hardware requirements for Computers, or other technical specifications or
matters relating to the Software that affect the operation of the Software on
Computers. PC Manufacturer shall not be obligated to start installing any
updated or new Software on Computers until its next major product launch, unless
Prodigy requests PC Manufacturer to commence installation of an updated or new
Software prior to PC Manufacturer's next major product launch because the then
current version of the Software contains material that infringes or may infringe
the rights of a third party. Major product launches normally occur every six to
eight months.
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3.2 Prodigy shall provide on a master disk to PC Manufacturer end-user
membership documentation (the "Documentation") for inclusion in each Package.
The Documentation shall inform the end-user regarding access to, and enrollment
in the Service, and will include a special code which will identify the Service
and the PC Manufacturer under the introductory membership, subject to such
conditions of Service membership as Prodigy may impose in its sole discretion.
3.3 Prodigy may provide PC Manufacturer end-user membership inserts ("Inserts")
for inclusion with each Computer, containing information regarding access to the
Service.
3.4 Prodigy will list PC Manufacturer's Web site in and establish a link to PC
Manufacturer's Web site from an appropriate area on the Service.
3.5 For each calendar year during the Term Prodigy shall pay to PC Manufacturer
the amount described below for each potential Prodigy Internet Member (as
defined in the Prodigy Internet Service Membership Agreement) who becomes a
Converted Membership Holder during such calendar year. For purposes of this
Agreement, a "Converted Membership Holder" is a Member who has (a) used the
procedure set forth in the Documentation to enroll in the Service, and (b) fully
paid membership fees, as determined by Prodigy, for one month of membership
following the end of any trial offer period provided by Prodigy. Each Converted
Membership Holder shall be counted only once under this Section 3.5 regardless
of the duration of his/her membership in the Service. Notwithstanding anything
in this Agreement to the contrary, (i) a Converted Membership Holder does not
include members of the Prodigy Classic Service ("Prodigy Classic," which is
another interactive, information, communication and transaction service offered
by Prodigy) who choose to convert their membership from Prodigy Classic to
Prodigy Internet or who maintain their Prodigy Classic membership and enroll in
Prodigy Internet, as well; (ii) a Member cannot become a Converted Membership
Holder on or after the effective date of termination of this Agreement,
regardless of any reason for such termination, unless the Agreement is
terminated for breach by Prodigy, in which case a Member may become a Converted
Membership Holder for six months after termination and Prodigy will pay PC
Manufacturer the amounts listed below for each such Converted Membership Holder;
(iii) Prodigy will not owe PC Manufacturer any fee for any person or entity who
becomes a Member using any registration mechanism other than the Documentation
specially coded to identify PC Manufacturer; and (iv) the fee payable by Prodigy
hereunder is limited to one Converted Membership Holder per household,
regardless of the number of Converted Membership Holders who
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
reside in the same household. Payments to PC Manufacturer hereunder for each
calendar year during the Term shall be payable as follows:
3.5.1 No later than July 31 of the applicable year, Prodigy will report
to PC Manufacturer the number of Converted Membership Holders obtained
between January 1 and June 30 of that year, and pay to PC Manufacturer the
amount applicable to such Converted Membership Holders.
3.5.2 No later than January 31 of the immediately following year, Prodigy
will report to PC Manufacturer the number of Converted Membership Holders
obtained in the applicable year, and pay to PC Manufacturer the amount
applicable to such Converted Membership Holders, less the amount of any
payments previously made for Converted Membership Holders for that year.
3.5.3 The amount payable to PC Manufacturer for each Converted Membership
Holder in a calendar year, shall be calculated according to the following
table:
Number of Converted Membership
Holders obtained in such calendar year Amount
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[**] [**]
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[**] [**]
[**] [**]
3.6 Prodigy and PC Manufacturer, as amended, commenced January 1, 1994 (the
"Classic Contract"), and hereby agree to terminate the Classic Contract,
effective December 31, 1996. In addition, Prodigy and PC Manufacturer
acknowledge that Agreement No. 6102 between Prodigy and NEC Technologies, Inc.,
dated June 23, 1995 (the "NEC Contract") commenced in 1995, and hereby agree to
terminate the NEC Contract, effective December 31, 1996. Notwithstanding the
termination of the Classic Contract and the NEC Contract, Prodigy shall continue
to pay PC Manufacturer the amount set forth in
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the Classic Contract or NEC Contract, as applicable, for each Membership Holder
(as defined in the Prodigy Service Membership Agreement for Prodigy Classic) who
becomes a Prodigy Classic Converted Membership Holder until December 31, 1997.
For purposes of this Agreement, a "Prodigy Classic Converted Membership Holder"
is a Membership Holder who has (a) used the procedure set forth in the
documentation provided to PC Manufacturer (or to NEC Technologies, Inc. before
its business related to personal computers was acquired by PC Manufacturer) to
enroll in Prodigy Classic, and (b) fully paid membership fees, as determined by
Prodigy, for one month of Prodigy Classic membership following the end of any
trial offer period provided by Prodigy. Each Prodigy Classic Converted
Membership Holder shall be counted only once under this Section 3.6 regardless
of the duration of his/her membership in Prodigy Classic. Payments to PC
Manufacturer hereunder for each Prodigy Classic Converted Membership Holder
during the period from January 1, 1997 through December 31, 1997 Prodigy and PC
Manufacturer acknowledge that Agreement No. 3744 between shall be payable as
follows:
3.6.1 On or about July 31, 1997, Prodigy will report to PC Manufacturer
the number of Prodigy Classic Membership Holders who have become Prodigy
Classic Converted Membership Holders between January 1 and June 30 of that
year, and pay to PC Manufacturer (a) the amount set forth in the Classic
Contract for each such Prodigy Classic Converted Membership Holder who
became a Prodigy Classic Converted Membership Holder under the Classic
Contract and (b) the amount set forth in the NEC Contract for each such
Prodigy Classic Converted Membership Holder who became a Prodigy Classic
Converted Membership Holder under the NEC Contract.
3.6.2 No later than January 31, 1998, Prodigy will report to PC
Manufacturer the number of Prodigy Classic Membership Holders who have
become Prodigy Classic Converted Membership Holders between July 1, 1997
and December 31, 1997, and pay to PC Manufacturer (a) the amount set forth
in the Classic Contract for each Prodigy Classic Converted Membership
Holder who became a Prodigy Classic Converted Membership Holder under the
Classic Contract and (b) the amount set forth in the NEC Contract for each
such Prodigy Classic Converted Membership Holder who became a Prodigy
Classic Converted Membership Holder under the NEC Contract.
3.7 Prodigy shall provide PC Manufacturer during the Term of this Agreement
continued access to its server to allow purchasers of PC Manufacturer's
computers the ability to register the warranty associated with their computer
online through Prodigy's 800 number. Prodigy shall download the purchaser's
data information and forward it to PC Manufacturer. Prodigy shall filter the
names of the purchasers of the PC
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Manufacturer's computers who complete the warranty registration process online,
which it obtains from PC Manufacturer, to eliminate the names of those
purchasers who are already enrolled in the Service. Prodigy may then use the
remaining names to issue direct mail, encouraging the purchasers to enroll in
the Service, and for no other purpose.
3.8 Subject to the following sentence, Prodigy shall provide to PC
Manufacturer on a quarterly basis during the Term of this Agreement the email
address of each Converted Membership Holder, except for those Converted
Membership Holders about whom Prodigy does not release information based on
Prodigy's privacy policy, customer agreement and email etiquette policy in
effect at the time of delivery. The date of commencement of Prodigy's
obligations under this Section 3.8 and the details concerning Prodigy's
obligations and PC Manufacturer's rights with respect to the manner and
frequency of use of the information provided by Prodigy shall be set forth in an
addendum to this Agreement to be negotiated in good faith by the parties hereto.
3.9 The parties acknowledge that this Agreement does not preclude either party
from entering into bounty-type agreements for membership acquisition similar to
this Agreement with other entities, including other personal computer
manufacturers or online service providers and competitors of PC Manufacturer or
Prodigy.
3.10 Each statement provided by Prodigy under Sections 3.5 and 3.6 above shall
be deemed to have been accepted by PC Manufacturer unless PC Manufacturer
provides Prodigy with written notice, objecting to the statement, embodying,
with specificity, the reason or reasons for the objection within one (1) year of
the date such statement is due. Provided PC Manufacturer provides such written
notice of objection as set forth above, upon at least fifteen (15) days' written
notice, PC Manufacturer may conduct an audit on its behalf by an independent
certified public accountant of Prodigy records pertaining solely to this
Agreement. Such audit shall be conducted by an independent certified public
accountant, of PC Manufacturer's choosing, subject to Prodigy's reasonable
approval, and which is not then conducting an audit of Prodigy's books for any
other person, firm or corporation, during normal business hours and not more
than once per year and shall review the immediately preceding one year period
only. The cost of the audit shall be borne by PC Manufacturer; provided,
however, that should any audit reveal the amount paid by Prodigy to PC
Manufacturer pursuant to this Agreement for any year has been understated by
more than five percent (5%) of the amount actually owed, then the reasonable
cost of such audit, shall be paid by Prodigy. Within 30 days after completion
of an audit, PC Manufacturer shall provide Prodigy with a copy of the audit
report and, if there is a discrepancy between the amount owed and the amount
actually paid by Prodigy during the audited period, the party benefited by such
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discrepancy shall reimburse the other party for the difference not later than
thirty (30) days following delivery of the audit report to Prodigy. Any action
to be commenced in connection with such audit must be commenced within two years
of the date each statement is due.
4. OBLIGATIONS OF PC MANUFACTURER.
4.1 PC Manufacturer shall provide to Prodigy, for a reasonable period, a
representative sample of each of its computer configurations onto which it
intends to copy the Software, to ensure proper functioning of the Software and
Service in conjunction with such computers. Prodigy shall have the right to
reject those configurations on which the Software and/or Service does not
function properly, provided that PC Manufacturer will reasonably cooperate with
Prodigy to determine if modifications are feasible to the Software and/or the
Computers to resolve the non-functionality.
4.2 PC Manufacturer shall provide to Prodigy a representative sample of each
new Computer on which the Software is installed on loan for ninety (90) days as
soon as the Software is installed and testing commences, prior to general
shipment, to enable Prodigy to test the Software as installed on the Computer.
After the ninety (90) days have expired, Prodigy will either return the Computer
or purchase it, at cost, at Prodigy's option.
When PC Manufacturer develops a new hard drive (rather than a new machine), so
that the hard drive is reconfigured with a new format, PC Manufacturer will
supply Prodigy with a sample of the new hard drive as soon as it is available,
to enable Prodigy to test the Software on the new hard drive. Prodigy will
return the old hard drive to PC Manufacturer after receipt of the new hard
drive.
4.3 PC Manufacturer will cooperate with Prodigy in testing the Software on the
Computers. PC Manufacturer shall meet with Prodigy quarterly, commencing with
the Effective Date of this Agreement, (a) to exchange technology information and
updates which may affect the other parties' product; and (b) to develop mutually
beneficial marketing strategies.
4.4 Except as indicated above, PC Manufacturer will install the most current
version of the Software provided by Prodigy onto the hard drive of only those
Computers approved by Prodigy as described above prior to shipment of such
Computers for sale to any third party, including retailers, distributors, and
end-users, such copies to be used
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solely as described in this Agreement. Nothing in this Agreement shall prevent
PC Manufacturer from selling computers without the Software.
4.5 Subject to Prodigy's right of prior approval set forth in Section 7 below,
PC Manufacturer shall include specific reference to the Service: (i) by using
the Service logotype or other reference to the Service as approved by Prodigy,
in PC Manufacturer's retail sales training program. PC Manufacturer will
provide a link from an appropriate area on its Web site to a Prodigy promotional
page on Prodigy's server.
4.6 PC Manufacturer shall include a copy of the Insert, if provided by Prodigy,
with each Computer. Notwithstanding anything to the contrary contained herein,
PC Manufacturer shall not be required to do anything, which, in its reasonable
judgment, could cause the amount of money which it is otherwise eligible to
receive under Intel's marketing development program to be reduced or eliminated.
4.7 Commencing with the first month after the Effective Date, by the fifth
(5/th/) business day of each month, PC Manufacturer shall provide to Prodigy its
twelve (12) month rolling forecast, including the number and types of computers
on which PC Manufacturer plans to install the Software and ship in that upcoming
period to enable Prodigy to provide PC Manufacturer with Inserts and other
promotional materials, as agreed to by the parties hereto, on a timely and cost-
efficient basis and to develop marketing plans. By the fifth (5/th)/ business
day of each month, PC Manufacturer shall report to Prodigy the number of
Packages shipped from its manufacturing facilities during the preceding month.
Both the forecasts and reports to be provided by PC Manufacturer under this
Section 4.7 shall be deemed to be Confidential Information. Prodigy acknowledges
that Packard Xxxx cannot and does not guaranty that any such forecast will
accurately reflect the number of Packages which it will ship and Prodigy
acknowledges that Packard Xxxx makes no representation regarding the number of
customers which will become Members or Converted Members.
4.8 PC Manufacturer shall supply Prodigy on a quarterly basis a file
identifying the names of the purchasers of PC Manufacturer's computers who
completed PC Manufacturer's warranty registration process online. Prodigy may
use those names for marketing purposes as described in Section 3.7 above.
5. OWNERSHIP AND PROPERTY RIGHTS.
5.1 PC Manufacturer acknowledges that each Trademark is and shall remain the
exclusive property of Prodigy or the applicable third-party owner, and all use
by PC Manufacturer of any Trademark shall inure solely to the benefit of Prodigy
or such
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third-party owner, as applicable. Neither this Agreement nor the License granted
hereunder shall operate as a transfer to PC Manufacturer of any rights in or to
any Trademark, except for the limited rights expressly granted under the
License. PC Manufacturer shall not take any action that would undermine,
conflict with, or be contrary to the rights and interests of Prodigy and/or any
applicable third-party owner of any Trademark, including, without limitation,
any use of, or attempt to register, any trademark, service xxxx, or trade name
confusingly similar to any Trademark.
5.2 It is expressly understood and agreed that no title to, or ownership of,
the Software provided on any Master Disk, or any part thereof, is hereby
transferred to PC Manufacturer, and that title thereto is and shall remain the
property of Prodigy; and that all applicable copyrights, trade secrets, patents
and other intellectual property rights in the Software and all other items
licensed hereunder are and shall remain the property of Prodigy. PC
Manufacturer shall not remove any copyright notices or other proprietary
markings from any Master Disk or any copies of the Software distributed by PC
Manufacturer.
6. CONFIDENTIALITY.
6.1 Either party hereto may disclose to the other party certain information
that the party deems confidential. As used in this Section, "Confidential
Information" means all information, regardless of the form in which it is
transmitted, relating to the disclosing party's business which, if disclosed in
tangible or electronic form, bears a legend indicating that it is confidential
information or if disclosed orally or visually only, is defined as confidential
or proprietary at the time of disclosure and is promptly thereafter summarized
in a non-confidential memorandum to the receiving party. For a period of three
(3) years from the date of disclosure, the receiving party shall not disclose
any Confidential Information it receives from the other party to any person,
firm or corporation except to:
(a) its employees of Recipient and employees of its affiliated companies who
have a need to know and who have been informed of the confidentiality
obligations hereunder and (b) contractors or consultants under contract to the
receiving party who have a need to know, who have been informed of the receiving
party's obligations hereunder, and who have agreed in writing not to disclose
Confidential Information for a period not shorter than the nondisclosure period
provided above. The terms of this Agreement are confidential and neither party
hereto shall publicize or disclose the terms of this Agreement without the prior
written consent of the other party.
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6.2 The confidentiality obligations hereunder shall not apply to information
that: (a) is already known to the receiving party at the time of disclosure; (b)
is or becomes publicly known through no wrongful act of the receiving party; (c)
is received from a third party without similar restrictions and without breach
of this Agreement; (d) is independently developed by the receiving party without
access to Confidential Information; or (e) is lawfully required to be disclosed
to any governmental agency or is otherwise required to be disclosed by law.
7. PRIOR APPROVAL. The parties shall provide to each other for review all
promotional, advertising and other materials using or displaying any Trademark,
or mentioning PC Manufacturer or its trademarks including without limitation any
such materials as may be used in connection with any promotional or advertising
activities in which PC Manufacturer may engage with retailers with respect to
the Service or the Software, and shall not distribute or otherwise use them
without the other's prior written approval. The parties agree to change or
correct, at the creating party's expense, any such material or use thereof which
the other party, in its reasonable judgment, determines to be inaccurate,
misleading, objectionable, or a misuse of Trademarks or of PC Manufacturer's
trademarks. PC Manufacturer further agrees to comply with any reasonable
advertising guidelines for the Service and/or the Software that Prodigy may
issue from time to time; provided, however, that if Prodigy has previously
approved any such material, PC Manufacturer may use up its existing supplies of
such materials. Likewise, if PC Manufacturer has previously approved any
Prodigy-created promotional or advertising material that uses or displays a PC
Manufacturer trademark or logo, Prodigy may use up its existing supplies of such
materials. The requirement of prior approval under this Section 7 shall not
apply to either party's use, distribution and/or duplication as permitted
hereunder of any materials that the other party provides for such use,
distribution and/or duplication.
8. WARRANTIES AND LIMITATIONS OF LIABILITY.
8.1 Prodigy warrants to PC Manufacturer that the Software, as delivered to PC
Manufacturer on the Master Disk(s), will operate in conformity with Prodigy's
published specifications when properly installed and configured on a personal
computer system approved by Prodigy hereunder; that the Master Disk(s) will be
free from defects in material and workmanship; and that Prodigy has the full
right and power to enter into this Agreement and grant PC Manufacturer the
License hereunder.
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8.2 PC Manufacturer may reject and return for replacement, at Prodigy's expense
and risk, any Master Disk that fails to meet the warranty set forth in Section
8.1 hereof. To be eligible for replacement, PC Manufacturer must: (i) notify
Prodigy of such failure within ten (10) days of its discovery by PC
Manufacturer. Prodigy will pay the shipping, freight and insurance charges for
PC Manufacturer's return of the Master Disk and the replacement. This Section
8.2 states PC Manufacturer's exclusive remedy for breach of the warranty set
forth in Section 8.1 hereof.
8.3 THE WARRANTIES SET FORTH IN THIS SECTION 8 ARE IN LIEU OF ALL OTHER
WARRANTIES OF EITHER PARTY, EXPRESS OR IMPLIED. WITHOUT LIMITATION, PRODIGY
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS
FOR A PARTICULAR PURPOSE. NEITHER PARTY WILL BE LIABLE FOR ANY INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY KIND, WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER LEGAL THEORY, AND REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF ANY SUCH DAMAGES.
8.4 Each party warrants that (i) it has the full right and authority to
perform, and will abide by all laws, regulations, and other legal guidelines in
performing its obligations under this Agreement; and (ii) PC Manufacturer shall
duplicate and install the Software from the Master Disk(s) onto hard disks under
this Agreement in a manner consistent with accepted industry standards for hard
disk installations, so that the Software functions properly for each Package
sold or otherwise distributed.
8.5 Neither party hereto shall be liable to the other for damages of any kind,
including incidental, consequential or special damages on account of termination
of this Agreement for any reason whatsoever; provided, however, that such
termination shall not affect any claim, demand, liability or right of either
party arising under this Agreement prior to termination, or arising in any
manner after termination in connection with the sale or distribution by PC
Manufacturer of its remaining inventory of Packages.
9. INTELLECTUAL PROPERTY & INDEMNIFICATION.
9.1 Each party shall indemnify and hold the other, their respective parent,
subsidiary and affiliate companies, its and their officers, directors, agents
and employees, free and harmless from and against all claims, costs,
liabilities, judgments, damages and expenses (including reasonable attorneys'
fees and costs) arising out of any (a) breach of any warranties or
representations made in this Agreement; (b) failure to comply in a material
respect with any governmental law, statute, ordinance, administrative order,
rule or regulation, unless the claim arises out of or is a result of the other
party's breach of this
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Agreement; or (c) statement by a party containing misleading or inaccurate
references to the other party, including the other party's products or services,
in any advertising or promotional materials for which prior written approval was
not obtained.
9.2 In addition to Prodigy's indemnification obligation set forth in Sub-
section 9.1 above, Prodigy shall indemnify and hold PC Manufacturer, its parent,
subsidiary and affiliate companies, its and their officers, directors, agents
and employees, free and harmless from and against all claims, costs,
liabilities, judgments, damages and expenses (including reasonable attorneys'
fees and costs) arising out of any claim that the Software and any Trademark
licensed to PC Manufacturer for use hereunder, or any combination thereof,
infringes any patent, trademark, trade secret, copyright, or other proprietary
right of any third party granted under the laws of the United States and any
other country in which access to the Service is available locally or for any
claim for damage to property, or personal injury, or brought by an unrelated
third party related to the Service or its use.
9.3 In addition to PC Manufacturer's indemnification obligation set forth in
Sub-section 9.1 above, PC Manufacturer shall indemnify and hold Prodigy, its
parent, subsidiary and affiliate companies, its and their officers, directors,
agents and employees, free and harmless from and against all claims, costs,
liabilities, judgments, damages and expenses (including reasonable attorneys'
fees and costs) arising out of any claim relating to or in connection with
damage to property, or personal injury, in whole or in part, from any (a) actual
or alleged defect(s) in any Computer or other product, whether such defect is
latent or patent, (b) actual or alleged construction or design of such Computer
or other product, or (c) failure to comply with any specification or express or
implied warranty of PC Manufacturer as respects any such Computer disk or other
product. For purposes of this Section 9.3 only, "Computer" shall be deemed to
include any modem, monitor, and/or other equipment, part, or software (other
than the Software) included or installed with, in, or on such Computer by or on
behalf of PC Manufacturer.
9.4 It shall be an ongoing condition of the indemnity provided in Sections 9.1
through 9.3 above, that (a) the indemnified party give the other party prompt
written notice of any actual or threatened indemnifiable claim; and (b) provide
the other party, at the other party's expense, with all reasonable accessible
information in the indemnified party's possession and assistance requested by
the other party. Further, the indemnification provisions set forth in Sections
9.1 through 9.3 above shall apply only with respect to a final settlement
approved in writing by the indemnifying party if the settlement is for money
damages only, and by the indemnified party if the settlement is for other than
money damages, or a final, nonappealable judgment. Each party reserves the
right, at its own expense, to assume the exclusive defense and control of any
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matter otherwise subject to indemnification by the other party hereunder, and in
such event, the other party shall have no further obligation to provide
indemnification for such matter hereunder.
10. MISCELLANEOUS. The parties hereto are independent contractors acting for
their own accounts; may not bind, act for or represent the other; and have no
agency, partnership or joint venture relationship. This Agreement shall be
governed by and construed in accordance with the laws of the state in which the
initial defendant to the action is domiciled without regard to its conflict of
laws rules. All notices, communications and reports required or permitted under
this Agreement shall be in writing, and the same shall be given by registered or
certified mail, return receipt requested, addressed to the parties at the
addresses first set forth above (if to Prodigy, Attn: Vice President, OEM
Marketing, with a copy to General Counsel and a courtesy copy via e-mail to
notices@prodigy. net), or to such other address as may be specified hereafter in
writing in accordance with this sentence. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof, and
supersedes any prior agreements and understandings, both written and oral, which
may have existed between the parties with respect to the subject matter hereof.
This Agreement may not be modified except by a writing signed by both parties.
No failure or delay by any party in exercising any right hereunder shall operate
as a waiver thereof, and no single or partial exercise of any right shall
preclude any other or further exercise thereof or the exercise of any other
right hereunder. Neither party may assign this Agreement or any of its rights
or obligations hereunder without the prior written consent of the other party
and any attempted or purported assignment delegation or other transfer without
such required consent shall be void. In the event any one or more of the
provisions of this Agreement shall for any reason be held to be invalid, illegal
or unenforceable, the remaining provisions of this Agreement shall be
unimpaired, and the parties will negotiate in good faith to substitute a
provision of like economic affect. This Agreement may be executed in
counterparts, which taken together, shall constitute one Agreement and any party
hereto may execute this Agreement by signing such counterpart.
-14-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the date last below
written.
PACKARD XXXX NEC, INC. PRODIGY SERVICES CORPORATION
By: /s/ Xxx Xxxxxx By: /s/ X. Xxxxxxxxx
------------------------------ -----------------------------
Name: Xxx Xxxxxx Name: Xxxx Xxxxxxxxx
----------------------------- ----------------------------
Title: Sr. V.P. Mrtg. Title: Vice President OEM
---------------------------- ---------------------------
Date: 9-19-97 , 1997 Date: 9-24-97 , 1997
----------------------------- ----------------------------
Federal Employer ID No. _____________This document has been created with
automatic paragraph numbering: Levels 1(1.); 2 (1.1); 3 (1.1.1); 4 (1.1.1.1)
and 5 (a.) etc.
APPROVED BY
XXXX XXXXXXX
DATE: 9/16/97
-----------------------------
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Attachment A
PRODIGY TRADEMARKS
Prodigy (R)
Prodigy Internet (tm)
Prodigy Internet logo
-16-
Contract No. 6601-1
ADDENDUM NO. 1 TO CONTRACT NO. 6601
-----------------------------------
THIS ADDENDUM NO. 1 (the "Addendum"), is made by and between Packard Xxxx
NEC, Inc. ("PC Manufacturer"), whose address is 0000 Xxxxxxx Xxxxxx Xxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000 and Prodigy Communications Corporation
("Prodigy"), a Delaware corporation, whose address is 00 Xxxxx Xxxxxxxx, Xxxxx
Xxxxxx, Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, Prodigy and PC Manufacturer (together, the "Parties") entered into
an Agreement effective as of October 1, 1996 (No. 6601 and referred to
hereinafter as the "Agreement"), whereby Prodigy granted a license to PC
Manufacturer to pre-install, duplicate, market and distribute the Software onto
certain of PC Manufacturer's computers and promote such Software; and
WHEREAS, Prodigy and PC Manufacturer wish to undertake a joint promotional
program (the "Rebate Program") to increase the sales of their respective
products and services;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereby agree to the terms of
this Addendum to the Agreement as follows:
1. Defined Terms. Except as otherwise set forth in this Addendum, all
defined terms have the same meaning as provided in the Agreement.
2. Rebate Program. The Parties agree to engage in and market the Rebate
Program, which shall include the following terms, with any changes or additions
mutually agreed to by the Parties:
(a) If a potential Prodigy Internet Member (i) purchases
any of the PC Manufacturer's computer systems listed in Subsection
1 (b) below during the period between September 16, 1998 and
December 31, 1998; and (ii) becomes a Converted Membership Holder
using the pre-loaded Software, specially coded to identify the
Service, the PC Manufacturer, and the Rebate Program, by paying
$100 for a special five (5) month membership to the Service upon
enrollment during the period from September 16, 1998 through
January 31, 1999, Prodigy shall issue each such Converted
Membership a rebate check of $100 in accordance with the terms and
conditions of the Rebate Program.
Confidential
Contract No. 6601-1
(b) PC Manufacturer's computer systems (the "Computer
Systems") for which the Rebate Program applies: all Packard Xxxx
and NEC computer-factory installed with Windows 98 software.
3. Obligations of Prodigy.
(a) Prodigy shall provide at its sole expense, including
without limitation, the costs of media and delivery, to PC
Manufacturer one or more Master Disks, which shall include the most
current release of the Software, to be used by PC Manufacturer for
hard disk installation of the Software under Section 2.1.1 of the
Agreement.
(b) The Documentation included in the Master Disks provided
by Prodigy for purposes of this Addendum shall include a special
code (which shall identify the Service, the PC Manufacturer, the
Rebate Program and the 60 Day With CC Program, as defined below)
and will offer end-users who use the procedure set forth in the
Documentation to enroll in the Service the option of enrolling in
the Service under either (i) the Rebate Program or (ii) a trial
period of sixty (60) days, provided the potential Prodigy Internet
Member enrolls in the Service with a credit card (the "60 Day With
CC Program").
(c) Prodigy shall provide PC Manufacturer Inserts relating
to the 60 Day With CC Program for inclusion with each Computer
System, stickers promoting the 60 Day With CC Program to be affixed
to the packaging for the Computer Systems, and coupons and
promotional materials relating to the Rebate Program to be
distributed by PC Manufacturer to retailers who offer the Computer
Systems for sale to consumers.
(d) Prodigy shall enter into an agreement with a fulfillment
house, to be mutually agreed by the Parties, to handle fulfillment
of the Rebate Program (which will include issuance of the checks to
Converted Membership Holders who are entitled to a rebate under the
Rebate Program, unless such issuances are made directly by Prodigy)
and customer inquiries relating to the Rebate Program.
4. Obligations of PC Manufacturer.
(a) Subject to compliance on the part of its retailers, which
PC Manufacturer shall use reasonable commercial efforts to obtain,
PC Manufacturer shall use commercially reasonable efforts to
provide national mention of the Rebate Program in Sunday newspaper
advertisements of retailers who participate in The Rebate Program
for five (5) of the ten (10)
Contract No. 6601-I
weekends during the period between September 16, 1998 and December
31, 1998.
(b) To the extent possible, given timing constraints and channel
issues, PC Manufacturer shall use commercially reasonable efforts to
remove AT&T Worldnet from the folder on the Computer Systems' desktop,
entitled, "PB Direct," for the duration of the Rebate Program. In any
event, PC Manufacturer shall give at least equal prominence to Prodigy
Internet as it gives to America Online.
(c) Commencing September 16, 1998, PC Manufacturer agrees to the
replacement by Prodigy of the 60 Day With CC Program for the 60 Day no
credit card trial offer ("60 Day No CC Program") currently available
on PC Manufacturer's computer systems. PC manufacturer acknowledges
that Prodigy shall continue to honor its 60 Day No CC Program for as
long as Prodigy deems necessary or appropriate.
(d) PC Manufacturer shall promote both the Rebate Program and 60
Day With CC Program on PB Direct by (i) allowing Prodigy to include
such promotions on its servers; (ii) including promotional materials
relating to the 60 Day With CC Program in the boxes of each Computer
System; (iii) affixing stickers promoting the 60 Day With CC Program
to the packaging for the Computer Systems; (iv) distributing coupons
and promotional materials relating to the Rebate Program to retailers
who offer the Computer Systems for sale to consumers; and (v)
undertaking other promotional and marketing efforts as mutually agreed
to by PC Manufacturer and Prodigy.
5. Financial Terms.
(a) Prodigy shall not pay and PC Manufacturer shall not be
entitled to receive any fee under Section 3 of the Agreement for any
Converted Membership Holders who enroll in the Service as part of the
Rebate Program.
(b) Prodigy shall pay PC Manufacturer fees under Section 3 of the
Agreement for any Converted Membership Holders who enroll in the
Service as part of the 60 Day With CC Program. The limitations set
forth in Section 3.5 of the Agreement regarding entitlement by PC
Manufacturer to fees for Converted Membership Holders continue to
apply.
(c) PC Manufacturer shall pay Prodigy the costs associated with
the fulfillment services to be supplied in accordance with Section 3
(d) above. Payment shall be made within thirty (30) days after receipt
of each invoice therefor.
Confidential
Contract No. 6601-1
6. Term of Addendum; Survival.
(a) The term of this Addendum (the "Addendum Term") shall be
effective as of the date executed by the last party signing below (the
"Addendum Effective Date") and shall continue until January 31, 1999
or such other date as mutually agreed in writing by the Parties,
except that (a) PC Manufacturer shall continue to pay Prodigy for the
fulfillment costs under Section 3 (d) until May 31, 1999; and (b)
Prodigy shall continue to pay PC Manufacturer the fees for Converted
Membership Holders who enroll in the Service under both the 60 Day
With CC Program and 60 Day No CC Program in accordance with the terms
of the Agreement.
(b) Sections 11, 12 and 14 shall survive termination of this Addendum.
7. Prodigy's Trademarks. Prodigy's trademarks, product identifications,
artwork and other symbols and devices associated with Prodigy's products and
services ("Prodigy's Trademarks") are and shall remain Prodigy's property. PC
Manufacturer is hereby authorized to use Prodigy's Trademarks solely in any
advertising and promotion of the Rebate Program which is the subject of, and
during the term of, this Addendum, provided Prodigy has approved all such uses
in advance as set forth in the Agreement, which approval shall not be
unreasonably withheld or delayed. The right to use Prodigy's Trademarks is
nonexclusive, nonassignable and nontransferable. All uses by PC Manufacturer of
Prodigy's Trademarks shall inure solely to the benefit of Prodigy.
8. PC Manufacturer's Trademarks. PC Manufacturer's trademarks, product
identifications, artwork and other symbols and devices associated with PC
Manufacturer's products and services ("PC Manufacturer's Trademarks") are and
shall remain PC Manufacturer's property. Prodigy is hereby authorized to use PC
Manufacturer's Trademarks solely in advertising and promotion of the Rebate
Program which is the subject of, and during the term of, this Addendum provided
PC Manufacturer shall have approved all such uses in advance as set forth in the
Agreement, which approval shall not be unreasonably withheld or delayed. The
right to use PC Manufacturer's Trademarks is nonexclusive, nonassignable and
nontransferable. All uses by Prodigy of PC Manufacturer's Trademarks shall inure
solely to the benefit of PC Manufacturer.
9. PC Manufacturer's Warranties. In addition to the warranties provided in
Section 8 of the Agreement, PC Manufacturer represents and warrants that (a) it
has the full right and legal authority to enter into and fully perform this
Addendum in accordance with its terms without violating the rights of any third
party; that (b) its Trademarks do not infringe the trademarks or trade names of
any third party; and (c) it will not alter copy approved by Prodigy or issue
unapproved copy containing statements or claims about the Rebate Program,
Prodigy's services or products, or Prodigy's Trademarks without the express
prior consent of Prodigy.
Confidential
Contract No.6601-1
l0. Prodigy's Warranties. In addition to the warranties provided in
Section 8 of the Agreement, Prodigy represents and warrants that (a) it has the
full right and legal authority to enter into and fully perform this Addendum in
accordance with its terms without violating the rights of any third party; (b)
its Trademarks do not infringe the trademarks or trade names of any Third party;
(c) it will comply with all applicable laws, regulations and ordinances
pertaining to the promotion and conduct of the Rebate Program; and (d) it will
not alter copy approved by PC Manufacturer nor issue unapproved copy containing
statements or claims about the Rebate Program, PC Manufacturer's services or
products, or PC Manufacturer's Trademarks without the express prior consent of
PC Manufacturer.
11. Limitations of Liability. THE WARRANTIES SET FORTH IN SECTIONS 9 AND 10
ABOVE AND SECTION 8 OF THE AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES OF THE
PARTIES HERETO, EXPRESSED OR IMPLIED. WITHOUT LIMITATION, EACH OF THE PARTIES
HERETO SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. EXCEPT WITH RESPECT TO LIABILITY ARISING FROM
A PARTY'S WARRANTIES, REPRESENTATIONS AND INDEMNIFICATION OBLIGATIONS HEREUNDER,
NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES) SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE
OR ANTICIPATED PROFITS OR LOST BUSINESS.
Indemnification.
(a) In addition to Prodigy's indemnification obligations set forth in
Section 9 of the Agreement, with respect to the Rebate Program which
is the subject of this Addendum, Prodigy shall indemnify and hold PC
Manufacturer harmless from all claims, demands, liabilities, suits and
proceedings (including any brought in or before any court, government
or administrative body, arbitration panel or other tribunal) and any
and all expenses arising therefrom, including reasonable attorneys'
fees, against or involving PC Manufacturer on account of or arising
out of any of the following: (i) Prodigy's breach of any of Prodigy's
warranties, representations or obligations under the Agreement or this
Addendum; and (ii) the conduct or content of the Rebate Program and
the advertising and promotion therefor, except as provided or altered
by PC Manufacturer or any retailer participating in the Rebate
Program.
(b) In addition to PC Manufacturer's indemnification obligations set forth
in
Confidential
Contract No. 6601-1
Section 9 of the Agreement, with respect to the Rebate Program which
is the subject of this Addendum, PC Manufacturer shall indemnify and
hold Prodigy harmless from all claims, demands, liabilities, suits and
proceedings (including any brought in or before any court, government
or administrative body, arbitration panel or other tribunal) and any
and all expenses arising therefrom, including reasonable attorneys'
fees, against or involving Prodigy on account of or arising out of any
of the following: PC Manufacturer's breach of any of PC Manufacturer's
warranties, representations or obligations under the Agreement or this
Addendum.
(c) The indemnified party will promptly notify the other party of any
claim, demand, suit or proceeding for which the other party has agreed
to indemnify and hold the indemnified party harmless, and the other
party, upon written request by the indemnified party, will promptly
defend and continue the defense of such claim, demand, suit or
proceeding at the other party `s expense. If the other party fails to
undertake and continue such defense, the indemnified party will have
the right (but not the obligation) to make and continue such defense
as it considers appropriate, and the expenses and costs thereof,
including but not limited to attorneys' fees, out-of-pocket expenses
and the costs of an appeal and bond thereof, together with the amounts
of any judgment rendered against the indemnified party, will be paid
by the other party. Nothing herein will prevent the indemnified party
from defending, if it so desires in its own discretion, any such
claim, demand, suit or proceeding at its own expense through its own
counsel, notwithstanding that the defense thereof may have been
undertaken by the other party.
13. Prior Approval. Each of the parties hereto shall obtain the prior
approval of the other party for all promotional and advertising materials to be
used in connection with the Rebate Program in accordance with Section 7 of the
Agreement.
Confidential
Contract No.6601-1
14. Confidentiality. This Addendum is confidential and shall be treated as
Confidential Information in accordance with Section 6 of the Agreement.
Except as set forth hereby, all terms of the Agreement shall remain in full
force and effect; provided however, that in the event of a conflict between this
----------------
Addendum No. 1 and the Agreement, the terms of this Addendum No. 1 will prevail.
IN WITNESS WHEREOF, the parties have caused this Addendum No. 1 to be
executed by their duly authorized representatives, effective as of the date last
below written.
PACKARD XXXX NEC, INC. PRODIGY COMMUNICATIONS CORPORATION
By: By: [ILLEGIBLE SIGNATURE]
-------------------------- ---------------------------
Name: Name: [ILLEGIBLE SIGNATURE]
------------------------ --------------------------
Title: Title: EVP, GenCounsel(acting)
----------------------- -------------------------
Date: Date: 8/28/98
------------------------ -------------------------
[ILLEGIBLE SIGNATURE]
VP US Sales
8/28/98
