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EXHIBIT 10.39
RONALD A. KATZ TECHNOLOGY LICENSING, L.P.
LICENSE AGREEMENT
- CONTENTS -
SECTION HEADING PAGE
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l. DEFINITIONS............................................................. 1
2. LICENSE................................................................. 3
3. CONSIDERATION........................................................... 5
4. REPORTS, PAYMENTS, RECORDS AND AUDITS................................... 8
5. REPRESENTATIONS AND WARRANTIES.......................................... 9
6. DEFAULT................................................................. 10
7. TERMINATION............................................................. 10
8. CONFIDENTIALITY......................................................... 11
9. ARBITRATION............................................................. 11
10. PRESS RELEASE........................................................... 12
11. PATENT MARKING.......................................................... 12
12. NOTICES................................................................. 13
13. INVALIDITY.............................................................. 13
14. ENTIRE AGREEMENT........................................................ 13
15. SECTION HEADINGS........................................................ 13
16. GOVERNING LAW........................................................... 13
17. NO AGENCY............................................................... 14
EXHIBITS
EXHIBIT A............................................................... 15
EXHIBIT B............................................................... 19
EXHIBIT C............................................................... 22
EXHIBIT D............................................................... 24
HOME SHOPPING NETWORK, INC.
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LICENSE AGREEMENT
This License Agreement ("Agreement") is entered as of January 1, 1996 (the
"Effective Date") by and between the Parties, Ronald A. Katz Technology
Licensing, L.P. (Licensor), a California Limited Partnership, having offices
at 9401 Wilshire Blvd., Suite 900, Beverly Hills, California 90212, and Home
Shopping Network, Inc., having offices at 11831 30th Court North, St.
Petersburg, Florida 33716.
WHEREAS, Licensor is the owner of patent and patent application rights
relating to Automated Transaction Processing Utilizing Communication
Facilities and/or Computer Telephone Integration (ACTI patents) and has the
right to grant non-exclusive licenses and covenants not to sue thereunder;
WHEREAS, Licensee desires to obtain certain non-exclusive rights under the
ACTI patents as provided herein;
WHEREAS, Licensor and Licensee (the "Parties") recognize the potential
difficulty and inefficiency to both parties of negotiating and administering
individual licenses to each of such ACTI patents relating to a given activity
of Licensee;
WHEREAS, the Parties have reviewed the activities of Licensee as related to
the ACTI patents and on the basis of their knowledge have selected
appropriate Fields-Of-Use for the activities of Licensee with respect to the
ACTI patents;
WHEREAS, in view of the nature of the ACTI patents, the business and
activities of Licensee, the mutual convenience of and efficiency to the
Parties and the equities of the situation, the Parties have resolved that
specific Field-Of-Use Licenses are proper and appropriate as set forth
herein; and
NOW, THEREFORE, in consideration of the mutual promises and other
consideration as set forth herein, the Parties agree as follows:
1. DEFINITIONS
1.1 "Licensed Patents" shall mean all United States and foreign
patents listed in Exhibit A, as well as all United States and foreign patents
that have issued or may issue on applications whose subject matter in whole
or in part is entitled to the benefit of the filing date(s) of any such
patents or applications on which they are based, including, without
limitation, continuations, continuations-in-part, divisions, reissues and
extensions.
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1.2 "Licensed Territories" shall mean the United States and its
Territories, and all foreign countries in which one or more of the Licensed
Patents have issued and remain in effect at any time during the term of this
Agreement.
1.3(a) "Field-of-Use" shall mean an activity defined in Exhibit B.
(b) "Field-Of-Use License" shall mean a license to make, have made
and use (but not sell, lease or otherwise transfer for use by others, except as
specified herein) products and processes of the Licensed Patents within one
or more specified Fields-Of-Use. As specified below in detail, the relative
Field-Of-Use of this Agreement is Television Shopping Systems.
1.4. "Carrier" shall mean any entity which transmits a communication
having a voice component over a communication channel.
1.5(a) "Campaign" shall mean automated transaction processing
services provided by Licensee or its Subsidiaries.
(b) "Customers" of Licenses are all those to whom Licensee sell
products during the course of electronic on-air retailing.
1.6 "Elapsed Carrier Time" shall mean, with respect to Campaigns,
the transport minutes, i.e. the aggregate elapsed time of all callers
participating in Campaigns during which each caller is connected to a Carrier
(whether or not Licensee is the customer of record with the billing carrier) in
relation to the Campaign. The following examples illustrate the proper
application of the foregoing definition: (i) if a caller is connected to a
Carrier in the execution of a Campaign and while the caller is so connected, an
outbound call is made by Licensee, the elapsed time during which the outbound
call is connected to a Carrier is not to be added to the elapsed time during
which the caller is connected to his Carrier in computing the Elapsed Carrier
Time of the Campaign, (ii) if ten (10) separate individual callers call Licensee
in connection with a Campaign and each caller is connected to Licensee for ten
(10) minutes, the Elapsed Carrier Time of the Campaign would be the aggregate of
the elapsed time for each Caller is connected through a Carrier to Licensee in
connection with the Campaign (in this example, one hundred (100) minutes), and
(iii) if three, (3) calls were connected to Licensee of the following durations:
first call, one hundred (100) seconds; second call, fifty (50) seconds; and
third call, forty (40) seconds (all as measured by the Carrier) the Elapsed
Carrier Time for these calls would be one hundred ninety (190) seconds
irrespective of any rounding methods that might be applied.
1.7 "Automated Minutes" shall mean all minutes of Elapsed Carrier
Time utilized in the course of Campaigns, other than: (i) minutes spent
automatically answering a call and thereafter immediately transferring the call
to a live operator, without any automated call processing, because the caller
elects not to use the automated system(s); (ii) minutes spent
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with such live operator; and (iii) minutes spent waiting for connection to, or
talking to, a show host.
1.8 "Subsidiary" shall mean a person or entity controlled by
Licensee; such control being exercised through the ownership or control,
directly or indirectly, of more than 50% of all the voting power of the shares
or other interests entitled to vote for the election of directors or other
governing authority; however, a person or entity shall be considered an
Subsidiary only for the time during which such control exists. Sublicensee's
"Subsidiaries" on the date of execution of this Agreement are: Home Shopping
Club, Inc., Home Shopping Network Outlets, Inc., Home Shopping Services, Inc.,
HSN Capital Corporation, HSN Credit Corporation, HSN Entertainment Events,
Inc., HSN Entertainment Holding Company, Inc., HSN Entertainment Joint Ventures
II Inc., HSN Fulfillment, Inc., HSN Fulfillment of Iowa, Inc., HSN Fulfillment
of Nevada, Inc., HSN Fulfillment of Virginia, Inc., HSN Insurance, Inc., HSN
Interactive, Inc., HSN Lifeway Health Products, Inc. dba HSN Products, Inc.,
HSN Liquidation, Inc., HSN Liquidation of Florida, HSN Mail Order, Inc., HSN
Realty, Inc., HSN Redi-Med, Inc., HSN Television Shopping Mall, Inc., HSN
Transportation, Inc., HSN Travel, Inc., Internet Shopping Network, Inc.,
MarkeTechs Services, Inc., National Call Center, Inc., Ortho-Vent, Inc., Vela
Research, Inc., World Rez, Inc.
1.9 "Arbitrator" must be a patent attorney acceptable to the
parties having an electrical engineering, computer science or similar
background and licensing experience in the field of telecommunications and
experience in alternative dispute resolution procedures.
2. LICENSE
2.1 Licensor hereby grants to Licensee, and Licensee's
Subsidiaries, a non-exclusive, Field-Of-Use License to make, have made, use and
provide services using (but not to sublicense, sell, lease or otherwise transfer
for use by others) products or processes embodying any and all inventions
claimed in the Licensed Patents within the Television Shopping Systems
Field-Of-Use and in the Licensed Territories.
2.2 Although Licensee does not currently conduct activities within the
Television Shopping Systems Via Cable Facilities Field-Of-Use, Licensor hereby
covenants not to sue Licensee if Licensee undertakes such activities in the
future in conjunction with its use of interactive voice response system(s)
within the Television Shopping Systems Field-Of-Use; however, any such
activities shall not convey a license or right of any kind, either express or
implied, to any entity offering cable facilities and/or terminals to access
Licensee's ordering system(s). This covenant not to sue is expressly
conditioned on Licensee's notifying any such entity that the entity's
activities are not licensed under the terms of this Agreement.
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2.3 Licensor agrees to release Licensee (and its Subsidiaries)
from any and all claims of infringement of the Licensed Patents for acts
performed prior to the Effective Date within the licensed Field-Of-Use of this
Agreement, subject to the following conditions:
(a) payment of the Advance Royalty pursuant to this Agreement;
and,
(b) full and faithful performance of the term of the Agreement by
Licensee or any assigns or successors permitted under the terms of this
Agreement for a period of four (4) years after the Effective Date.
No suit may be brought against Licensee (or its Subsidiary) during
such four (4) year period for infringement of the Licensed Patents in the
Television Shopping Systems Field-Of-Use as long as Licensee continues to
faithfully perform the terms of this Agreement. If this Agreement has not been
terminated within the first four and one-half (4 1/2) years after the Effective
Date, then Licensee's full and faith performance hereunder shall be presumed,
However, nothing in this Section 2.3 alone. shall release or otherwise reduce
the, liability of Customers of licensee or its Subsidiaries.
2.4 Neither this Agreement, nor the rights conveyed hereunder,
may be assigned by Licensee except that the entire license may be assigned
along with an assignment or transfer of Licensee's entire business relating to
the subject matter of the Agreement, provided, however, that: (a) on or before
the date of any such assignment or transfer the assignee executes and delivers
to Licensor an undertaking to assume and perform all obligations of Licensee
hereunder with respect to the business being assigned or transferred, including
maintenance of the systems used by Licensee (or other effective systems) to
determine Automated Minutes for purposes of this Agreement and distinguish them
from unlicensed activities of the assignee, and; (b) the assignee shall derive
no rights under this Agreement with respect to any other business or operations
conducted by it prior to, or after, the date of assignment or transfer, and
nothing contained in this Agreement shall preclude Licensor from making claims
or asserting its rights with respect to such other business or operations
either before or after the date of assignment or transfer.
2.5 Businesses acquired by Licensee (or its Subsidiaries) are
licensed under this Agreement to the extent they satisfy the definition of
"Subsidiaries" in Section 1.8, and accordingly shall bear the appropriate
royalty; however, no covenant not to sue or release granted herein shall be
applicable to the business acquired for activities prior to the acquisition. If
Licensee (or its Subsidiary) merges, acquires or is acquired by another licensee
under the Licensed Patents, the successor may elect as between redundant
agreements. Furthermore, if Licensee contracts with another licensee that has a
royalty bearing license under the Licensed Patents to perform all of the
operations then performed by Licensee which fall within the claims of the
Licensed Patents, Licensee shall be relieved of its obligation to make any
further payments hereunder for the period during which such contract and such
other licensee's royalty bearing license remain in effect, except for Running
Royalties accrued to the date Licensee ceases performing such operations and
any
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amounts deferred under Section 3.3 or rolled over under Section 3.4. For
purposes of Section 2.3(b) of this Agreement, payments made by such other
licensee under the Licensed Patents shall be deemed full and faithful
performance of the terms of this Agreement by Licensee.
2.6 Subject to the provisions of Section 2.7, if Licensor should
in the future grant a royalty bearing license to QVC or Value Vision ("QV or
VV") under the Licensed Patents for the Television Shopping Systems
Field-Of-Use and QV or VV obtains Lower Running Royalty terms for such
Field-Of-Use, or for any specific portion of such Field-Of-Use, Licensee (and
its Subsidiaries) shall have the right to obtain such Lower Running Royalty
rates for such Field-Of-Use or for the corresponding portion of such
Field-Of-Use, provided that Licensee also accepts any less favorable terms of
the other license, including but not limited to advance royalties, entry fees
or guaranteed minimum royalties. For purposes of this Agreement, "Lower
Running Royalty terms" means lower Running Royalty terms or other more
favorable terms which could result in lower annual payments to Licensor than
the terms of Section 3 of this Agreement. The date that Licensee shall be
entitled to such Lower Running Royalty terms for such Field-Of-Use or any
specific portion of such Field-Of-Use shall be the date of first accrual of
Running Royalty by QV or VV. Licensor shall notify Licensee in writing within
sixty (60) days of QV or VV obtaining a Lower Running Royalty rate, providing
Licensee with a true and correct summary of the aforementioned Lower Running
Royalty rates and any less favorable terms, but not identifying QV or VV by
name. Licensee's (or its Subsidiaries) right to obtain a Lower Running Royalty
rate must be exercised in writing by Licensee within sixty (60) days of the
receipt of written notice from Licensor of the Lower Running Royalty being
obtained by QV or VV. Should Licensor fail to timely notify Licensee of the
Lower Running Royalty obtained by QV or VV, Licensee has the right to apply the
Lower Running Royalty rate retroactively to the date of such other license.
Licensee shall not be entitled, however, to any refund or credit based on other
terms of such other license, and any entry fee or additional advance royalty
due by Licensee shall be payable at the time the election is made.
3. CONSIDERATION
3.1 In consideration of the grants by Licensor, Licensee shall pay
Licensor an Advance Royalty and a Running Royalty as specified below.
(a) Licensee shall pay to Licensor upon execution of this
Agreement a non-refundable Advance Royalty of Two Hundred
Fifty Thousand Dollars ($250,000). This Advance Royalty shall
be credited from January 1, 1996 through December 31, 1996,
against Running Royalties accrued during such period for use by
Licensee and its Subsidiaries in the Field-Of-Use licensed
under this Agreement. If the total amount of Running Royalties
accrued any time through December 31, 1996 exceeds the Advance
Royalty, licensee shall
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pay the excess to Licensor at the end of the then current
Royalty Reporting Period. No credit shall be given, however,
for any portion of the Advance Royalty greater than the amount
of Running Royalties accrued through December 31, 1996.
(b) During the term of this Agreement, Licensee shall pay to
Licensor Running Royalty, accrued from January 1, 1996,
as follows (it being understood that while it is Licensee's
obligation to pay Running Royalty to Licensor, the Running
Royalty is computed on activities of Licensee and Licensee's
Subsidiaries):
(1) For the period from January 1, 1996 through
December 31, 1999, Running Royalties shall be $.01
(1.0 cent) per Automated Minute of usage by Licensee
and its Subsidiaries within the licensed
Field-Of-Use;
(2) For the period from January 1, 2000 through
December 31, 2002, Running Royalties shall be $.0125
(1.25 cents) per Automated Minute of usage by
Licensee and its Subsidiaries within the licensed
Field-Of-Use;
(3) For the period from January 1, 2003 through
December 31, 2005, Running Royalties shall be $.015
(1.5 cents) per Automated Minute of usage by
Licensee and its Subsidiaries within the licensed
Field-Of-Use.
(c) Licensee shall incur Running Royalties only through December
31, 2005. If this Agreement remains in force beyond December
31, 2005, the license granted hereunder shall become a
fully-paid license, subject only to Licensee paying any
previously incurred Running Royalties which have been rolled
over from prior years to the extent required under Section 3.3.
3.2 Advance Royalty shall be paid by Licensee and credited by
Licensor as required in Section 3.1(a), above. In addition, during the term of
this Agreement, Licensee shall pay Running Royalty as required under Section
3.1(b), above, as follows. At the end of each Royalty Reporting Period (as set
forth in Section 4.1 below) through December 31, 2005, the total accrued Running
Royalty from licensed activities of Licensee and its Subsidiaries shall be
determined. For periods ending no later than December 31, 1996, this amount
shall be reduced by any uncredited portion of the Advance Royalty. The
remaining amount of accrued Running Royalty, if any, shall be paid to Licensor
as set forth below.
3.3 During the first two years following July 1, 1996, in any
Royalty Reporting Period when Earning Before Interest, Taxes, Depreciation and
Amortization (EBITDA) is less than Two and One-Half Million Dollars
($2,500,000), any payments due for such Royalty Reporting Period shall be
deferred to the next Royalty Reporting Period when
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EBITDA exceeds Two and One-Half Million Dollars ($2,500,000); however, in no
event shall a deferral of Running Royalties last longer than three Royalty
Reporting Periods, nor shall any such deferred royalties be considered in
determining maximum annual payments for any subsequent year as provided in
Section 3.4. For example, if One Hundred Fifty Thousand Dollars ($150,000) in
royalties are deferred under this Section 3.3 for the fourth quarter of 1998,
that amount shall not be applied toward the Six Hundred Thousand Dollar
($600,000) maximum annual payment for 1999.
3.4 There shall be no limit on Running Royalty payments for
activities of Licensee and its Subsidiaries in foreign countries; however,
Running Royalty payments due by Licensee to Licensor for activities in the
United States and its Territories shall not exceed the following maximum annual
payments in the years indicated:
1996-1997 1998 1999 2000-2002 2003-2005
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$500,000 $550,000 $600,000 $650,000 $750,000
per year per year per year
Royalties earned in excess of the stated maximums shall be "rolled
over" for payment after December 31, 2005 at a rate of Seven Hundred Fifty
Thousand Dollars ($750,000) per year to the extent set forth in this paragraph.
The first One Million Dollars ($1,000,000) of any rolled over amount shall be
paid in full; of the second One Million Dollars ($1,000,000) rolled over, only
seventy-five percent (75%) of the face amount shall be payable by Licensee;
and of any rolled over royalties in excess of Two Million Dollars ($2,000,000),
only fifty percent (50%) of the face amount shall be payable by Licensee. For
example, if Two and One-Half Million Dollars ($2,500,000) were rolled over
under the provisions of this Section, the full amount of the first One Million
Dollars ($1,000,000) would be paid, Seven Hundred Fifty Thousand Dollars
($750,000) of the second One Million Dollars would be paid and Two Hundred
Fifty Thousand Dollars ($250,000) of the last Five Hundred Thousand Dollars
($500,000) would be paid, in full discharge of the Two Million Five Hundred
Thousand Dollars ($2,500,000) rolled over. Thus, a total of Two Million Dollars
($2,000,000) would be paid after December 31, 2005 at a rate of Seven Hundred
Fifty Thousand Dollars ($750,000) per year until fully discharged. This amount
represents a non-refundable, non-cancellable obligation of the Licensee in all
circumstances.
3.5 All payments hereunder made by Licensee (except overpayments made
in error and identified by Licensee within twenty-four (24) months of erroneous
payment) are non-refundable.
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4. REPORTS, PAYMENTS, RECORDS AND AUDITS
4.1 Licensees first report of its activities under this Agreement
to Licensor shall be for the period from January 1, 1996 through June 30, 1996,
and reports shall be made quarterly thereafter through December 31, 2005. Such
periods shall be the "Royalty Reporting Periods" of this Agreement.
Licensee has advised Licensor that as of the date of execution of this
Agreement it cannot determine the number of Automated Minutes precisely, but
can make a reasonable estimate. Licensee is undertaking improvements to its
technology which will allow it to accurately determine Automated Minutes by
December 31, 1996. Accordingly, Royalty Reports for 1996, including the annual
statement required under Section 4.2 below, will be based upon Automated
Minutes as Determined under Licensee's available technology, with such good
faith adjustments as Licensee can reasonably make after December 31, 1996 to
give effect to Automated Minutes which may not have been fully reflected in
earlier Royalty Reports.
4.2 The reports of Section 4.1 shall include a statement prepared
by the Licensee stating, on a telephone number and name of activity basis, the
total minutes and the total Automated Minutes utilized in the course of the
activities of Licensee and its Subsidiaries in the Television Shopping Systems
Field-Of-Use, and the EBITDA for the Royalty Reporting Period involved. The
report shall also identify the Subsidiaries benefitting from the license
granted herein and confirm that it is a complete and accurate accounting of all
minutes (including Automated Minutes) and EBITDA for the specified Royalty
Reporting Period. A carrier statement from each of the appropriate
telecommunications carriers must be attached, showing net minutes, and
indicating that these are complete statements for the Licensee and any
appropriate Subsidiaries benefitting from the license granted herein. The
reports must contain enough detail to allow Licensor to reconcile the carrier
statements to the Licensee reports. In addition to reports for each Royalty
Reporting Period, Licensee shall deliver to Licensor an annual statement
confirmed by Licensee's chief information officer stating that the quarterly
statements for the past year have been examined and they correctly and fairly
indicate the amounts due. All annual statements shall contain an accounting of
any royalties rolled over that year as well as the total amount of royalties
rolled over to date.
4.3 Each report of Section 4.1 shall be made prior to the
expiration of forty-five (45) days after the close of the Royalty Reporting
Period to which it pertains, with the first one due within forty-five (45) days
after June 30, 1996. The reports shall be accompanied by all amounts due. The
annual statements referred to in Section 4.2 shall be provided, with payment
due, if any, prior to the expiration of forty-five (45) days following December
31 of the year involved. After December 31, 2005, annual statements and
accompanying payments shall continue to be made until all rolled over royalties
have been paid to the extent required under Section 3.4 above, with the first
such payment of rolled over royalties due prior to the expiration of forty-five
days following December 31, 2005.
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4.4 Licensee shall maintain regular and complete records for a
period of three years after the expiration of the calendar quarter to which the
records pertain, sufficient to enable verification of the accuracy of reports.
The records shall be maintained at Licensee's regular place of business and, on
thirty (30) days written notice, shall be available for inspection by Licensor's
outside accountants, after executing an appropriate confidentiality agreement,
during normal business hours, for three years immediately following each
calendar quarter while the Agreement is in force. Licensor shall have the right,
once a calendar year on thirty (30) days written notice to Licensee, to have its
accountants audit relevant records, systems and any other documents or things
underlying the calculation of amounts under this Agreement. However, such
outside accountants shall maintain such information in confidence (executing an
appropriate confidentiality agreement) and shall disclose to Licensor only the
proper calculation of amounts. Should any such audit reveal a payment
shortfall, the amount of the shortfall shall be paid by adding that amount to
Licensee's next royalty payment remittance after the discovery thereof, together
with pro rata interest calculated on a yearly basis at the prime rate, as it
appears in the "Money Rates" (or like) section of the Wall Street Journal on the
next business day after the shortfall is discovered. If any such shortfall is in
excess of twelve and one-half (12.5) percent of the amount due, Licensor shall
have the right to have its accountants audit such records, systems and other
documents one additional time in the ensuing year. In the event an overpayment
is detected from such audit, licensee shall be credited an amount equal to the
overpayment in the next monthly royalty statement following the date of such
detection. If licensee disagrees with an audit revealing a payment shortfall, a
determination of whether there is a shortfall and the payment due hereunder
shall be submitted to Arbitration in accordance with Section 10. In any event,
each party shall bear its own costs, fees or expenses associated with any
inspection or audit specified in this provision. Any audits beyond those
specified in this provision shall be at Licensor's expense.
4.5 If Licensee fails to make timely payments of payments of
amounts due or provide timely statements, Licensor may notify Licensee in
writing of such failure within thirty (30) days after such failure occurs.
Licensee shall have sixty (60) days from receipt of Licensor's written notice to
cure such failure; otherwise, such failure shall constitute a material breach
of this Agreement,
4.6 Licensor agrees to hold in strict confidence all information
obtained from Licensee, including or relating to the reports, records, payments
and audits described herein.
5. REPRESENTATIONS AND WARRANTIES
5.1 Licensor represents and warrants that it is the sole owner of
all rights, title and interest (legal and equitable) of the Licensed Patents,
that it has the right to license the Licensed Patents, that it has the right to
enter into this Agreement and that it is not a party to any agreements or
obligations inconsistent with this Agreement. Furthermore, Licensor
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represents and warrants that there are no previously granted exclusive licenses
granted to any third parties in any of the Fields-Of-Use as defined in Exhibit
B. It is understood that any such license granted by Licensor is subject to the
rights granted by this Agreement to the Licensee and its Subsidiaries.
5.2 This license does not and shall not be interpreted or
construed to include: (1) any warranty or representation as to the validity,
enforceability or scope of any Licensed Patent, (2) any warranty or
representation that any specific apparatus or method used by Licensee in
connection with any Licensed Patent is or will be free from infringement of
patents of others or other intangible rights of third parties, (3) any
requirement to file any patent application, secure or maintain any patent, (4)
any obligation to bring or prosecute any action for infringement of any
Licensed Patent, (5) any obligation to furnish any technical or support
information, (6) any license or right by implication or estoppel, or (7) any
warranty regarding implementations of Licensed Patents as with respect to
merchantability, use or fitness for any particular purpose.
5.3 Licensee represents and warrants that the number of Automated
Minutes it utilized in 1995 in the course of its activities in the Television
Shopping Systems Field-Of-Use is Thirty-Nine Million, Five Hundred Fifty-Seven
Thousand, Two Hundred Fifty-Eight minutes (39,557,258). These activities
include, but are not limited to, order calls ("Tootie") and customer service
calls ("Tooter").
6. DEFAULT
6.1 Upon the occurrence of a default, Licensor may give written
notice of the default to Licensee, identifying the nature of the default, within
sixty (60) days of Licensor having notice of the default. Licensee shall have
sixty (60) days following receipt of such notice to cure the default.
Thereafter, if the default is not cured by Licensee within the time provided,
Licensor may immediately terminate this Agreement by giving written notice of
termination to Licensee.
7. TERMINATION
7.1 Licensee shall have the right after January 1, 1997 to
terminate this entire Agreement at any time by a written notice to Licensor at
km thirty (30) days in advance. Such termination shall be effective on December
31 of the calendar year in which such notice is provided.
7.2 The termination of the license granted herein shall not
relieve the duty and obligation to pay in full all amounts due as of the
effective date of such termination.
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7.3 If this Agreement is terminated any time Prior to the end
of year 10, all royalties "rolled over" under the terms of Section 3.4 shall,
be paid in full and represent non-refundable, non-cancellable obligations of
Licensee in all circumstances.
7.4 Unless sooner terminated as provided herein, this Agreement
shalt continue until the expiration of the last to expire of the Licensed
Patents.
8. CONFIDENTIALITY
8.1 Except as stated in Section 10, PRESS RELEASE, the parties
hereto agree to maintain the details of this Agreement in confidence and not to
reveal the same to third parties, except officers, directors, employees, agents,
attorneys and partners of Licensee, and except as required by law subject to
the other provisions of this Agreement.
8.2 Notwithstanding the provisions of Section 8.1, Licensor
may disclose a summary of the terms and conditions of this Agreement
to existing or potential licensees, providing such existing or potential
licensees agree in writing to maintain the disclosed summary of terms and
conditions confidential. In addition, Licensor may disclose the names of
Licensee and its Subsidiaries in the normal course of its business.
9. ARBITRATION
9.1 No dispute between the Parties concerning validity of any of
the Licensed Patents, enforceability of any of the Licensed Patents,
infringement of any of the Licensed Patents or the scope of any of the claims of
the Licensed Patents may be Submitted to arbitration unless otherwise agreed by
the parties in writing.
9.2 Except for a dispute concerning the subjects of Section 10.1,
any dispute between the Parties concerning the interpretation, construction
or application of any terms, covenants or conditions of this Agreement shall be
resolved by arbitration.
9.3 Arbitration shall be in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (AAA) by a sole
Arbitrator who shall be appointed by the parties; if the parties do not agree
on an arbitrator within sixty (60) days of notice, the arbitrator shall be
appointed by the president of the AAA. Any other choice of law clause to the
contrary in this Agreement notwithstanding, the arbitration shall be governed
by the United States Arbitration Act, 9 U.S.C. Section 1-16 and insofar as the
proceeding relates to patents, it shall also be governed by 35 U.S.C. Section
294, to the extent applicable. The parties shall have the right to conduct
reasonable discovery in any such arbitration, as determined by the arbitrator.
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9.4 Any award made (i) shall be a bare award limited to a
holding for or against a party and affording such remedy as is deemed equitable,
just and within the scope of the Agreement, (ii) shall be with a brief statement
(not to exceed ten (10) pages) of the reasoning on which the award rests; (iii)
shall be made within four (4) months of the appointment of the arbitrator; (iv)
may be entered in any court of competent jurisdiction; and (v) any award
pertaining to a patent which is subsequently determined to be invalid or
unenforceable or otherwise precluded from being enforced in a judgment rendered
by a court of competent jurisdiction from which an appeal can or has been taken
my be modified by any court of competent jurisdiction upon application by any
party to the arbitration,
9.5 The requirement for arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the arbitrator is not
empowered to act or make any award other than based solely on the rights and
obligations of the parties prior to any such termination.
9.6 Each party shall bear its own expenses incurred in connection
with any attempt to resolve disputes hereunder, but those related to the
compensation and expenses of the arbitrator shall be borne equally.
9.7 The arbitrator shall not have authority to award punitive or
other damages in excess of compensatory damages and each party irrevocably
waives any claim thereto.
10. PRESS RELEASE
10.1 A mutually approved press release in the form attached hereto
as Exhibit C may be released by Licensor on a date mutually agreed upon. Both
the Licensee, its officers and principals, and the Licensor, its officers and
principals, agree and undertake that any and all future statements by them, or
any of them, to the public, the media or to business associates shall be
entirely consistent with the Press Release as mutually approved. Nothing in
this Agreement shall be construed to preclude Licensee, its officers or
principals from making any disclosures required by law, regulation or judicial
process.
11. PATENT MARKING
11.1 If Licensee or its Subsidiaries at any time during the term of
this Agreement distribute printed materials regarding their automated systems,
such materials shall contain a notice of the Licensed Patents as indicated in
Exhibit D.
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12. NOTICES
12.1 All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by Federal Express or other
nationally recognized overnight carrier, registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, with written
indication of delivery or tender, when applicable, addressed to the addressee
first set forth above or at such other address as either party may substitute
by written notice provided to the other party in such manner. Such notices
shall be deemed to have been served when delivered, or if delivery is not
accomplished by reason of some fault of the addressee, when tendered.
13. INVALIDITY
13.1 If any paragraph, provision, clause of this Agreement or claim
of any Licensed Patent shall be found or held to be invalid or unenforceable by
a court or other decision-making body of competent jurisdiction, the remainder
of the Agreement or Licensed Patents shall remain valid and enforceable, and to
the extent required in the pursuit of this Agreement, the Parties shall
negotiate in good faith a substitute, valid and enforceable provision which
reflects the Parties, intent in entering the Agreement.
14. ENTIRE AGREEMENT
14.1 The terms and conditions herein constitute the entire
Agreement between the Parties and supersede all previous agreements and
understandings, whether oral or written, between the Parties hereto with
respect to the subject matter hereof, and no prior agreement or understanding
varying or extending the same shall be binding upon either Party hereto.
15. SECTION HEADINGS
15.1 Thee section headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
16. GOVERNING LAW
16.1 This Agreement shall be governed and interpreted in accordance
with the laws of the state of California U.S.A., without reference to conflicts
of laws and principles. Any
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litigation between the Parties concerning the subjects of Section 9.1 shall
take place in the United States District Court for the Central District of
California and the Parties agree that the Court has jurisdiction over them.
However, in the case of arbitration requested specifically by one of the Parties
under Section 9, the arbitration shall be held in the state of domicile of the
other Party. For these purposes, any arbitration in Florida shall be held in
St. Petersburg or Tampa, at Licensee's election, and any arbitration in
California shall be held in Los Angeles.
17. NO AGENCY
17.1 Nothing herein contained shall be deemed to create or give
rise to an agency, joint venture or partnership relationship, or any
confidential or fiduciary relationship between the Parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Agreement on the dates indicated below.
LICENSOR
RONALD A. KATZ TECHNOLOGY LICENSING, L.P.,
a California limited partnership,
By: A2D, L.P., a California limited partnership,
its general partner,
By: A2D Corporation, a California corporation,
its general partner,
By: /s/ Ronald A. Katz DATE: 6/21 , 1996
-------------------------- --------
RONALD A. KATZ
Its Chief Executive
LICENSEE
Home Shopping Network, Inc.
By: /s/ James G. Held DATE: 6/20 , 1996
------------------------- --------
Name: James G. Held
-----------------------
Its President & CEO
-------------------------
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EXHIBIT A
RONALD A. KATZ TECHNOLOGY LICENSING, L.P.
UNITED STATES PATENTS
EXPIRED PATENTS
Patent No. Title
------ -----
4,071,698 Telephone System for Audio Demonstration
and Marketing of Goods or Services
UNEXPIRED PATENTS
Patent No. Title Issue Date
--------- ----- ----------
1. 4,792,968 Statistical Analysis 12/20/1988
System for Use With
Public Communication
Facility
2. 4,845,739 Telephonic-Interface 7/4/1989
Statistical Analysis
System
3. 4,930,150 Telephonic Interface 5/29/1990
Control System
4. 4,932,046 Telephone Programming 6/5/1990
System for Automated
Calling
5. 4,939,773 Multiple Party 7/3/1990
Telephone Control
System
6. 4,975,945 Universal Telephone 12/4/1990
Call Relay System
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EXHIBIT A - continued
RONALD A. KATZ TECHNOLOGY LICENSING, L.P.
UNEXPIRED PATENTS
Patent-No. Title Issue Date
---------- ----- ----------
7. 4,987,590 Multiple Party 1/22/1991
Telephone control
System
8. 5,014,298 Voice-Data Telephonic 5/7/1991
Control system
9. 5,0l6,270 Expanded Telephone 5/14/1991
Data Organization
System
10. 5,048,O75 Telephonic-Interface 9/10/1991
Statistical Analysis
System
11. 5,073,929 Voice-Data Telephonic 12/17/1991
Control System
12. 5,091,933 Multiple Party 2/25/1992
Telephone Control
System
13. 5,109,404 Telephone Call 4/28/1992
Processor With Select
Call Routing
14. 5,128,984 Telephone Interface 7/7/1992
Call Processing System
With Call Selectivity
15. 5,185,787 Multiple Party 2/9/1993
Telephone Control
System With Random
Dialing For Polling
16. 5,218,631 Telephonic-Interface 6/8/1993
Game Control System
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EXHIBIT A - continued
RONALD A. KATZ TECHNOLOGY LICENSING, L.P.
UNEXPIRED PATENTS
Patent No. Title Issue Date
---------- ----- ----------
17. 5,224,153 Voice-Data Telephonic 6/29/1993
Interface Control
system
18. 5,251,252 Telephone Interface 10/5/1993
Call Processing System
with Call Selectivity
19. 5,255,309 Telephonic-Interface 10/19/1993
Statistical Analysis
System
20. 5,259,023 Telephonic-Interface 11/2/1993
Statistical Analysis
System
21. 5,297,197 Multiple Party 3/22/1994
Telephone Control
System
22. 5,349,633 Telephonic-Interface 9/20/1994
Game Control System
23. 5,351,285 Multiple Format 9/27/1994
Telephonic Interface
Control System
24. 5,359,645 Voice-Data Telephonic 10/25/1994
Interface Control System
25. 5,365,575 Telephonic-Interface 11/15/1994
Lottery System
26. 5,442,688 Multiple Party 8/15/1995
Telephone Control System
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EXHIBIT A - CONTINUED
RONALD A. KATZ TECHNOLOGY LICENSING, L.P.
UNEXPIRED PATENTS
FOREIGN PATENTS
COUNTRIES
PATENT NO. COUNTRY TITLE EFFECTED IN
------------ ------- ----- -----------
1. 0 229 170 EPC Statistical Analysis Germany
system For Use with France
Public Communication U.K.
Facility (corresponds Netherlands
to U.S. Pat. No. 4,792,968) Sweden
2. 0 342 295 EPC Telephonic-Interface Germany
Statistical Analysis France
System (corresponds to U.K.
U.S. Pat. No. 4,845,739) Netherlands
Sweden
3. 0 230 403 UK Voice-Data Telephonic
Control System (corresponds
to U.S. Pate No. 5,073,929)
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EXHIBIT B
RONALD A. KATZ TECHNOLOGY LICENSING, L.P.
FIELDS OF USE
1. GROUP CONFERENCING (including "broadcast services)
One Example: Automated bridging of more than two callers utilizing some
form of "listen only" (unilateral) communication which may be combined
with some form of interactive communication.
2. GOVERNMENT LICENSING REGISTRATION (i.e., automotive registration)
The use of interactive voice services operated by a Government entity or
its designee to handle the process of a caller renewing a license.
3. STATE LOTTERY PREPAID TICKETS OR CARDS
The use of interactive voice services by a State or its designee for the
purpose of allowing a caller to enter a state lottery utilizing
interactive call processing technology.
4. PAY-PER-VIEW
Automated ordering of pay-per-view movies. Typically involves automated
ordering of a movie or event from a cable company utilizing automatic
identification capabilities and/or voice processing capabilities to
capture the number from which the subscriber is calling or the
callers account number, to speed the order and increase security.
5. PRODUCT/SERVICE SUPPORT
The interactive processing of calls operated by the manufacturer of the
product or the provider of the service, for the purpose of offering
customer advice or support. Typically the automated services are used
at the beginning of the call, often to greet callers, collect
information from then via touch tone and queue callers for subsequent
connection to some form of consultant.
6. TELEVISION SHOPPING SYSTEMS (automated ordering)
The use of interactive voice services operated by a television shopping
network, to handle ongoing orders for products or services in an
automated fashion. Typically, this involves the processing of credit
card information for payment. In such cases, the mere utilization and
authorization of credit cards by Licensee, whether with respect to cards
of a third party credit card issuer or cards issued by Licensee itself
in the conduct of its television shopping system business(es), fall
within the Television Shopping Systems Field-Of-Use of this Agreement
and shall not require a separate license for any other Field-Of-Use.
Any time such a third party is involved, however, Licensee shall notify
the third party in writing that it does not receive any
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license or other right, either express or implied, under the Licensed
Patents by virtue of its participation in Licensee's activities.
In addition, automated promotions (i,e., games, contests, lotteries
and polls) associated with the offering of products over television,
and utilizing Licensee's television shopping system(s), fall within
the Television Shopping Systems Field-Of-Use of this Agreement and
shall not require a separate license for any other Field-Of-Use.
7. TELEVISION SHOPPING SYSTEMS VIA CABLE FACILITIES (automated ordering,
The automated processing of orders (over cable distribution media) for
products or services based on television programming, where the order
processing is offered directly by the licensee without an interactive
voice component.
8. ELECTRONIC PERSONAL CLASSIFIEDS
The use of interactive voice services to allow advertisers and
interested respondents to contact each other. Typically, advertisers
create and store voice messages which can be heard by potential
respondents who can, in turn, leave recorded voice messages for the
advertisers. Finally, advertisers have the ability to retrieve stored
responses. Advertisers may also have the ability to store attributes of
that which is being advertised via touch tone entry, for the purpose of
automatically matching similar attributes or requirements of the
respondents.
9. AUTOMATED SECURITIES TRANSACTIONS (buy/sell)
Interactive call processing on an ongoing basis, operated by the broker
or dealer of the securities, which allows callers to purchase, sell, or
trade securities such as stock and mutual funds, or transfer funds
between such securities. May include automated customer service
functions such as automated order status information and cancellation.
10. AUTOMATED CREDIT & CALLING CARD AUTHORIZATION SERVICES (excluding
prepaid cards) The provision of credit card authorization service by the
credit card firm or designee using interactive voice response as a stand
alone offering. (Note: This is as opposed to the obtaining of an
authorization as a part of processing a call for another purpose, i.e.,
an automated order, which is included in the Service Bureau
Field-Of-Use.)
11. INTERACTIVE TRANSACTIONS THROUGH CABLE COMMUNICATIONS FACILITIES
Automated interactive transactions of various types (e.g., games,
contests, lotteries and polls) conducted over a cable distribution
media (e,g., coaxial or fiber media).
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FIELDS OF USE
CONTINUED
12. AUTOMATED SERVICE BUREAU
All forms of fully automated call processing or combined automated
and live call processing [except as described in each of the other
Fields-of-Use defined herein] using interactive voice services, where
an independent bureau offers call termination services, often including
transport and call handling, to a sponsoring organization or an
internal group.
This Field-Of-Use includes prepaid card use and automated ordering,
which in turn include the obtaining of a credit card authorization as
part of such an order or other interactive process, at the regular per
minute rates. Ongoing automated ordering on behalf of a television
shopping network would be excluded as it represents another Field-Of-Use.
13. ENHANCED CABLE CUSTOMER SERVICE:
Cable related customer service (not including Pay-Per-View or
Interactive Transactions Through Cable Communications Facilities)
typically involving communications with customers concerning cable
accounting, billing, ordering of service and cable service related
equipment, coordination of installation, repairs or other cable
services. These communications are all related to the provision and
support of cable services only. Communications related to any other
area such as telephony or wireless service would be embraced in another
Field-Of-Use.
14. ENHANCED TELEPHONY CUSTOMER SERVICE:
Telephony-related customer service typically involving communications
with customers concerning local, long distance or other telephony
accounting, billing, ordering of service and service-related equipment,
coordination of installation, repairs, or other services only.
Communications related to any other area such as cable service would be
embraced in another Field-Of-Use.
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EXHIBIT C
DRAFT
HOME SHOPPING NETWORK LICENSES KATZ PATENT PORTFOLIO
Ronald A. Katz Technology Licensing, L.P. (RAK) announced today that
it has entered into a non-exclusive agreement with Home Shopping Network, Inc.
(NYSE-HSN) to license the extensive Katz patent portfolio of interactive
telecommunications technology. Home Shopping Network is one of many
major companies that have licensed these patents including American Express,
First Data Corp. and MCI Communications Corporation.
The RAK portfolio consists of 26 U.S. patents and 18 patent
applications resulting from Ronald A. Katz's pioneering work in the interactive
field during the 1980's. Katz is the named inventor on more than 30 patents
primarily in telecommunications and computing. He formed Telecredit, Inc., the
nation's first on-line real time credit and check cashing authorization system,
and was awarded a patent at co-inventor of that technology.
"We are Pleased to welcome Home Shopping Network as a licensee and
appreciate their recognition of the importance of our patent portfolio to their
business," said Ronald Katz.
James Held. President and chief executive officer of HSN said, "The
Katz patent license agreement will allow us to continue our leadership in the
use of interactive voice response communications to effectively serve our
customers."
Home Shopping Network pioneered the television shopping industry in
1982. Its 24-hour programming reaches approximately 69 million households via
cable and broadcast station affiliates and satellite dish receivers.
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EXHIBIT D
PATENT NOTICE
Home Shopping Network, Inc. is licensed under the following, and related Ronald
A, Katz Technology Licensing, L.P. United Statics Patents: 4,845,739;
5,255,309; 5,259,023; 5,347,633; 5,351,285; 5,365,575; 5,251,252; 5,359,645;
5,297,197; and others.
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