EXHIBIT 10.5
JOINT VENTURE LICENSE AGREEMENT
TABLE OF CONTENTS
PAGE
1. DEFINITIONS.........................................................3
2. LICENSES TO TWIN....................................................6
3. TRADEMARK LICENSE..................................................11
4. DELIVERY OBLIGATIONS...............................................11
5. LICENSES FROM TWIN.................................................13
6. SUPPORT AND TRAINING...............................................14
7. OTHER LICENSOR OBLIGATIONS.........................................15
8. PAYMENTS...........................................................18
9. TAXATION...........................................................19
10. INTELLECTUAL PROPERTY RIGHTS.......................................19
11. CONFIDENTIALITY....................................................20
12. INDEMNIFICATION....................................................21
13. WARRANTIES.........................................................23
14. DISCLAIMER; LIMITATION OF LIABILITY................................26
15. TERM AND TERMINATION...............................................26
16. MISCELLANEOUS......................................................29
EXHIBIT A DESCRIPTION OF THE IN PATENTS.....................................1
EXHIBIT B TWIN BUSINESS.....................................................1
EXHIBIT C PERFORMANCE CRITERIA..............................................1
EXHIBIT D DESCRIPTION OF CURRENT TW TECHNOLOGY..............................1
EXHIBIT E THIRD-PARTY LICENSES..............................................1
EXHIBIT F SUPPORT SERVICES..................................................1
-I-
JOINT VENTURE LICENSE AGREEMENT
This Joint Venture License Agreement ("Agreement"), dated as of January
31, 2000 ("Effective Date"), is among Two Way TV Limited ("TW"), a corporation
organized under the laws of England and Wales, having its principal office at
Two Way TV Limited., Beaumont House, Kensington Village, Avonmore Road, London,
England W148TS, Interactive Network, Inc. ("IN"), a California corporation
having its principal office at 1161 Old County Road, Belmont, California 94002
U.S.A. (each a "Licensor" and together "Licensors") and TWIN Entertainment Inc.
("TWIN"), a Delaware corporation having its principal office at 50 Francisco
Street, Suite 490, San Francisco, California 94111 U.S.A. (hereinafter
collectively referred to as the "Parties" and individually as a "Party").
RECITALS
A. IN and TW have entered into a Joint Venture and Stock Purchase
Agreement dated as of December 6, 1999 and contemporaneously with the execution
of this Agreement are entering into a Stockholders Agreement and Investors
Rights Agreement to establish TWIN to develop, market and supply digital (as
well as analog) interactive and related services, products and technology in the
Territory (as defined below).
B. TW is, among other things, in the business of developing, marketing,
and selling certain software and hardware products for interactive television
systems and other telecommunications uses, and has developed valuable
intellectual property related to such products, services and technology.
C. IN is, among other things, in the business of designing, developing
and licensing certain technology useful for interactive television and other
telecommunications applications, and has developed valuable intellectual
property related to such products, services and technology.
D. TWIN desires Licensors to grant to TWIN, and Licensors are each
willing to grant to TWIN, a license to use certain of their respective
intellectual property rights for developing, marketing and supplying certain
digital and analog interactive services, products and technology, in the
Territory and subject to the terms and conditions as hereinafter set forth.
E. Licensors have determined, through mutual agreement prior to the
Effective Date, which of each Licensor's technology and intellectual property
rights related to TWIN's business and existing as of the Effective Date will
initially be licensed to TWIN.
F. TWIN desires to receive from TW, and TW is willing to supply to
TWIN, certain relevant technical training, maintenance and support services.
G. Licensors desire TWIN to grant to Licensors, and TWIN is willing to
grant to Licensors, a right of first refusal to license for use outside the
Territory certain of TWIN's technology and associated intellectual property
rights that may be developed in the future, subject to the terms and conditions
as hereinafter set forth.
ACCORDINGLY, in consideration of the mutual covenants and promises
contained herein, the Parties agree as follows:
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1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Applicable Law" shall mean, as to any person, any statute, law,
rule, regulation, directive, treaty, judgment, order, decree or injunction of
any Governmental Authority that is applicable to or binding upon such person or
any of its properties.
1.2 "Approval Date" shall mean the date on which IN has received the
requisite vote by IN's shareholders approving the grant to TWIN of an exclusive
license under the Licensed Patents on the terms and conditions contained herein,
which date shall occur before the six (6) month anniversary of the Effective
Date.
1.3 "Associated Agreements" shall mean the Joint Venture and Stock
Purchase Agreement among the Parties dated as of December 6, 1999, and the
Stockholders Agreement and Investors Rights Agreement among the Parties and TWIN
of even date herewith.
1.4 "Confidential Information" shall mean information or materials
disclosed to a Party by another Party that are marked as "Confidential" or
"Proprietary" or, if disclosed orally, identified as such at the time of
disclosure and reduced by the disclosing Party to written form marked
"Confidential" or "Proprietary" within twenty (20) days after oral disclosure.
"Confidential Information" shall include, whether or not marked "Confidential"
or "Proprietary," all source code of any Party.
1.5 "Current TW Technology" shall mean all of the TW Technology and
TW's Proprietary Rights developed, reduced to practice and/or existing prior to
the Effective Date. A summary listing of certain key items of Current TW
Technology is set forth in EXHIBIT D.
1.6 "Customer" shall mean a Person having a valid business or
residential mailing address in the Territory (which is not a post office box
number unless there is another valid mailing address in the Territory) who
receives TWIN services or products in the Territory. Customers may include,
without limitation, telecommunications service, equipment and content providers;
Internet service providers; cable television service, equipment and content
providers; satellite television service, equipment and content providers; and
end user consumers in the Territory.
1.7 "Derivative Work" shall mean a "derivative work" or "compilation"
within the meaning of such terms under the U.S. Copyright Act (17 U.S.C. ss. 101
et seq.), which meaning is as follows: a "derivative work" is a work based upon
one or more preexisting works, such as a translation, abridgment, condensation,
or any other form in which a work may be recast, transformed, or adapted, or a
work consisting of editorial revisions, annotations, elaborations, or other
modifications which, as a whole, represent an original work of authorship; and a
"compilation" is a work formed by the collection and assembling of preexisting
materials or of data that are selected, coordinated, or arranged in such a way
that the resulting work as a whole constitutes an original work of authorship,
and including collective works.
1.8 "Effective Date" shall mean the date of this Agreement as set forth
in the preamble.
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1.9 "Gannett Rights" shall mean the right of Gannett Co., Inc. to
participate in opportunities related to real-time electronic news services on a
national basis as described in the Stock Purchase Agreement listed in EXHIBIT E.
1.10 "Governmental Authority" shall mean any domestic or foreign
government, governmental authority, court, tribunal, agency or other regulatory,
administrative or judicial agency, commission or organization, and any
subdivision, branch or department of any of the foregoing.
1.11 "Gross Revenues" shall mean the total revenues derived from the
sale, licensing, provision and distribution of products, services and technology
and intellectual property rights by TWIN and its Subsidiaries, without
duplication, less any sales, excise and consumption taxes and customs duties
levied in respect of such transactions, accepted returns of the pertinent items,
bona fide price adjustments (including distributor price adjustments),
commissions, and any packing, shipping, transportation and insurance costs
related to the sale of such items which costs are passed through to (i.e., the
actual costs incurred are billed on to) a customer or other Person.
1.12 "Handset Technology," as used herein, shall mean the subset of TW
Technology comprising inventions, whether patented or not, software, hardware
and knowhow that enable the transmission of data between a handheld transmitting
device (e.g., a set-top box remote control device) and a receiving device (e.g.,
a set-top box) or between a set-top box to a handheld or other "slave" device.
1.13 "IN Patents" shall mean the specific patents set forth in EXHIBIT
A and the initial patents, if any, issuing on the applications set forth in
EXHIBIT A and, in either case, any continuations, divisionals, continued
prosecution applications, reissues, and reexaminations thereof (but excluding
any continuations in part and new inventions).
1.14 "IN Technology" shall mean all of IN's future content, interactive
content, software (in source code, object code, byte code, script, or other
form), software documentation, technologies, inventions, know-how, trade
secrets, market and test data, technical data, techniques, methods, processes,
and other technological materials or information that are wholly owned by IN.
1.15 "Licensed Marks" shall mean all trademarks, service marks, trade
names, logos and marks now owned or hereafter developed, acquired or used by TW
in connection with the TW Technology Related to TWIN Business.
1.16 "Localization" shall mean the adaptation of the TW Technology for
purposes of developing the TWIN services and products and conducting the TWIN
Business, including the conversion of art and other materials (including logos,
if any) to American English for use in connection with the TWIN services and
products. Any modification of the Licensed Marks shall be mutually agreed upon
by the Parties in writing.
1.17 "Performance Criteria" shall mean the performance milestones and
schedule set forth in EXHIBIT C, as may be amended by the Licensors from time to
time hereafter in a writing signed by the Licensors.
1.18 "Person" shall mean a natural individual, Governmental Authority,
legal entity, partnership, firm, corporation and other association.
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1.19 "Proprietary Rights" shall mean, collectively, Patents, Trade
Secrets, Copyrights, Moral Rights, rights in trade dress, design and maskwork
rights, any rights analogous to those set forth in the preceding clauses, and
all other intellectual property rights and proprietary rights, excluding
trademarks and service marks, whether arising under the laws of the United
States or any other state, country or jurisdiction in each case now existing or
hereafter developed or coming into existence during the term of this Agreement.
For purposes of this Agreement: (a) "Patents" shall mean all patent rights and
all right, title and interest in all letters patent or equivalent rights and
applications, including any reissue, extension, division, continuation, or
continuation-in-part applications throughout the world; (b) "Trade Secrets"
shall mean all right, title and interest in all trade secrets and trade secret
rights arising under common law, state law, federal law or laws of foreign
countries; (c) "Copyrights" shall mean all copyrights, and all right, title and
interest in all copyrights, copyright registrations and applications for
copyright registration, certificates of copyright and copyrighted interests
throughout the world, and all right, title and interest in related applications
and registrations throughout the world; and (d) "Moral Rights" shall mean any
right to claim authorship, to prevent modification or other derogatory action in
relation to the subject work, to withdraw from or control distribution, and any
similar rights, existing under the law of any country or under any treaty,
regardless of whether such right is referred to as a "moral right."
1.20 "Related to TWIN Business" shall mean useful to, relevant to or
capable of being used in connection with the TWIN Business, as broadly
interpreted and as determined by vote in accordance with Section 2.6 with
respect to TW's Proprietary Rights and TW Technology that are developed or
reduced to practice or that come into existence on or after the Effective Date.
1.21 "Subsidiary," with respect to a Party, shall mean any corporation,
partnership or other entity, more than fifty percent (50%) of whose shares or
ownership interests entitled to vote for the election of directors (other than
any shares whose voting rights are subject to restriction) or, in the case of a
noncorporate entity, the equivalent interests, are owned or controlled by such
party, directly or indirectly, now or hereafter, but such corporation,
partnership or other entity shall be deemed to be a Subsidiary only for so long
as such ownership or control exists.
1.22 "Territory" shall mean (a) the United States of America and all
its territories, and Canada, and (b) such additional countries and jurisdictions
as the Licensors may hereafter mutually agree in writing to include in the
definition of "Territory."
1.23 "TW Technology" shall mean all of TW's existing and future:
content, interactive content, software (in source code, object code, byte code,
script, or other form), software documentation, technologies, inventions,
know-how, trade secrets, Handset Technology, circuit diagrams, schematics,
logic-flow diagrams, market and test data, technical data, techniques, methods,
processes, and other technological materials and information that are wholly
owned by TW or as to which, and only to the extent and subject to the conditions
under which, TW has the right, as of the Effective Date or thereafter during the
term of this Agreement, to grant licenses or sublicenses of the scope granted
herein, without such grant resulting in the payment of royalties or other
consideration to third parties (unless and until TW is reimbursed for any
payments so made, in which case such information shall be included within TW
Technology for any license or sublicense to TWIN) except for payments to a
Subsidiary of TW, if any, or payments to third parties for TW Technology
developed or created by such third parties while employed by TW or any
Subsidiary thereof. TW Technology includes all of the foregoing and any
improvements, enhancements and upgrades thereto hereafter developed or acquired
by TW.
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1.24 "TWIN Business" shall mean the business activities expected to be
conducted by TWIN as described in EXHIBIT B, and any additional business
activities contained in any future business plan of TWIN or amendment thereto,
which additional activities have been approved by the Board of Directors of TWIN
and by both TW and IN.
1.25 "TWIN Derivative Works" shall mean Derivative Works based on the
TW Technology licensed to TWIN hereunder which are developed solely by (or under
contract for) TWIN, and includes without limitation Localizations of the TW
Technology and Licensed Marks.
1.26 "TWIN Technology" shall mean all of TWIN's content, interactive
content, software (in source code, object code, byte code, script, or other
form), technologies, inventions, know-how, trade secrets, market and test data,
technical data, techniques, methods, processes, and other technological
materials or information that is wholly owned by TWIN (excluding all of the TW
Technology and IN Patents, and associated Proprietary Rights thereto, that are
licensed to TWIN hereunder).
2. LICENSES TO TWIN.
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2.1 TW License. Subject to all the terms and conditions of this
Agreement, TW hereby grants to TWIN a non-exclusive, royalty-free, perpetual
(subject to termination under Section 16 ("Term and Termination")),
non-transferable license under all of TW's Proprietary Rights (exclusive of the
Licensed Marks), in the Territory, to:
(a) Reproduce, publicly perform, publicly display, modify,
distribute and otherwise use the Current TW Technology, the TW Technology
Related to TWIN Business, and any TWIN Derivative Works thereof, including
without limitation the rights to perform Localization and to create TWIN
Derivative Works;
(b) Reproduce and otherwise use the Current TW Technology, the
TW Technology Related to TWIN Business, and TWIN Derivative Works for back-up,
archival, maintenance, and technical support purposes;
(c) Make, have made (which terms shall include the acts of
assembling and/or testing), use, sell, offer for sale, import, lease and
otherwise dispose of products and services in the Territory; and
(d) Effective as of the Approval Date and only during the
periods when the license granted in this Section 2.1 ("TW License") is
exclusive, sublicense any of the foregoing rights in the Territory on a
non-exclusive basis, provided that the other terms and conditions of any such
sublicense are substantially similar to the terms and conditions of this
Agreement, provided further that any such sublicense (or amendment or extension
thereof) shall be subject to the prior written approval of TW, which approval
shall not be unreasonably withheld, provided further that TWIN shall provide
written notice to Licensors of the name and address of each sublicensee promptly
upon entering any such sublicense, and provided further that such right to
sublicense shall terminate immediately and automatically upon any conversion of
the license grant in this Section 2.2 ("IN License") from exclusive to
non-exclusive in accordance with the terms hereof. This right to sublicense
shall not include the right of any sublicensee to grant further sublicenses.
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The foregoing license shall become EXCLUSIVE (even as against TW),
effective as of the Approval Date, subject to Section 2.4 ("Performance
Criteria"), Section 7.3(b) ("Casco Agreement") and Section 8.3 ("Termination of
Support Fees").
2.2 IN LICENSE. Subject to all the terms and conditions of this
Agreement and the Gannett Rights, IN hereby grants to TWIN a non-exclusive
royalty-free, non-transferable license, under the IN Patents, for the life of
such IN Patents (subject to termination under Section 16 ("Term and
Termination")) in the Territory, to:
(a) Make, have made (which terms shall include the acts of
assembling and/or testing), use, sell, offer for sale, lease or otherwise
dispose of products and services embodying the inventions described in the IN
Patents; and
(b) Effective as of the Approval Date and only during the
periods when the license granted in this Section 2.2 ("IN License") is
exclusive, sublicense any of the foregoing rights in the Territory on a
non-exclusive basis, provided that the other terms and conditions of any such
sublicense are substantially similar to the terms and conditions of this
Agreement, provided further that TWIN shall provide written notice to Licensors
of the name and address of each sublicensee promptly upon entering any such
sublicense, provided further that any such sublicense (or amendment or extension
thereof) shall be subject to the prior written approval of IN, which approval
shall not be unreasonably withheld, and provided further that such right to
sublicense shall terminate immediately and automatically upon any conversion of
the license grant in this Section 2.2 ("IN License") from exclusive to
non-exclusive in accordance with the terms hereof. This right to sublicense
shall not include the right of any sublicensee to grant further sublicenses.
The foregoing license shall become EXCLUSIVE (even as against IN),
effective as of the Approval Date, subject to Section 2.4 ("Performance
Criteria") and to the third-party rights and licenses under the IN Patents
existing as of the Effective Date as set forth in EXHIBIT E. No other rights to
the IN Patents or any other Proprietary Rights of IN are granted by IN.
2.3 TERRITORIAL CONSIDERATIONS. The foregoing licenses in Section 2.1
("TW License") and 2.2 ("IN License") include the following:
(a) The incidental use of TWIN products and services by
Customers while outside of the Territory, but TWIN shall not promote such
access;
(b) The incidental access to portions of TWIN products and
services from outside the Territory via any and all telephonic, broadcast and
electronic gateways and distribution channels, including without limitation
telephone, television, Internet, satellite and other wireless broadcast, and
cable networks, by third parties other than Customers by virtue of the
accessibility of TWIN products and services through the Internet and wireless
transmission media and methods, but TWIN shall not promote such access;
(c) The caching in the Territory of content, software, and
other portions of the TW Technology and TWIN Derivative Works by Internet
Service Providers and other third parties providing network and infrastructure
services for electronic and other gateways and distribution channels; and
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(d) Other ancillary and limited uses of or access to the TW
Technology and TWIN Derivative Works by third parties other than Customers
reasonably related to TWIN's implementation and delivery of TWIN products and
services in the Territory.
Notwithstanding the provisions of this Section 2.3 ("Territorial
Considerations"), TWIN shall make its best commercial efforts to discourage
third parties' and Customers' access to or use of TWIN's products and services
outside the Territory and shall make reasonable efforts, if commercially
feasible and practical, to prevent access to or use of TWIN's products and
services outside the Territory.
2.4 PERFORMANCE CRITERIA. The following provisions of Section 2.4
("Performance Criteria") shall become effective on the Approval Date and shall
remain in effect thereafter only for so long as the license granted in Section
2.1 ("TW License") and/or the license granted in Section 2.2 ("IN License") are
exclusive:
In the event that TWIN does not meet any of the Performance
Criteria in accordance with the schedule set forth in EXHIBIT
C, each Licensor shall have the option, exercisable by
delivering written notice ("Conversion Notice") simultaneously
to TWIN and the other Licensor within sixty (60) days after
the date such particular Performance Criteria was not met, to
convert to NON-EXCLUSIVE all of its license grants to TWIN set
forth in Sections 2.1, 2.2 and 2.3, as applicable, which
conversion shall become effective thirty (30) days after
receipt by both such Parties of the Conversion Notice and/or
(b) terminate its non-compete obligations set forth in Section
7.1 (a) ("Non-compete During Exclusivity"), effective thirty
(30) days after receipt by both such Parties of such written
notice. Notwithstanding the foregoing, if a Licensor, whether
through its representative(s) on the Board of Directors of
TWIN and whether by acting or failing to act, unreasonably
(i.e., without justification reasonable under the
circumstances) prevents TWIN from meeting any (or all) of the
Performance Criteria, such Licensor shall have no right under
this Section 2.4 to convert its license grants hereunder to
non-exclusive licenses or to terminate its non-compete
obligations in Section 7.1(a) ("Non-compete During
Exclusivity"). In the event of such "prevention" by a Licensor
("Preventing Licensor") the other Licensor ("Non-Preventing
Licensor") shall have the option, exercisable by delivering
written notice simultaneously to TWIN and the Preventing
Licensor within sixty (60) days after the later of the date
the Non-Preventing Licensor first becomes aware of such
prevention or the date the Performance Criteria was not met,
to: (a) convert to non-exclusive all of its license grants to
TWIN set forth in Sections 2.1, 2.2 and 2.3, as applicable,
which conversion shall become effective thirty (30) days after
receipt by TWIN and the Preventing Party of such written
notice, and/or (b) terminate its non-compete obligations set
forth in Section 7.1 (a) ("Non-compete During Exclusivity"),
effective thirty (30) days after receipt by both such Parties
of such written notice; provided, however, that the
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Non-Preventing Licensor shall not have such right if the
Preventing Party cures such breach within thirty (30) days of
receipt of such written notice such that the applicable
Performance Criteria is met within such thirty (30) day cure
period. Any such license conversion or termination of
non-compete obligations by the Non-Preventing Party shall not
modify, terminate or otherwise affect the exclusivity of the
license grants by or the non-compete obligations of the
Preventing Party, which shall remain unchanged.
2.5 RESERVATION OF RIGHTS.
(a) TW RESERVATION OF RIGHTS. The Parties agree that TW shall
have no obligation to license to TWIN, or provide support to TWIN for, TW
Technology or TW's Proprietary Rights independently developed by TW after the
Effective Date or coming into existence after the Effective Date which are
entirely new and not Related to TWIN Business, but any such TW Technology and
TW's Proprietary Rights shall nevertheless be offered to TWIN on a right of
first refusal basis in accordance with Section 2.7 (i.e. only if TW wishes to
make it available to any third party in the Territory).
(b) IN RESERVATION OF RIGHTS. The Parties agree that IN shall
have no obligation to license any IN Technology or any of IN's Proprietary
Rights (other than the IN Patents licensed hereunder), but any such IN
Technology and IN's Proprietary Rights developed by IN or coming into existence
after the Effective Date shall nevertheless be offered to TWIN on a right of
first refusal basis in accordance with Section 2.7 (i.e. only if IN wishes to
make it available to any third party in the Territory).
2.6 DETERMINATION OF "RELATED TO TWIN BUSINESS." If TW intends or
desires at any time to exclude any TW Technology or any of TW's Proprietary
Rights, other than the Current TW Technology, from TW's license grants to TWIN
hereunder, based on TW's good faith belief that such TW Technology and/or TW's
Proprietary Rights are not Related to TWIN Business, TW shall notify IN and TWIN
prior to licensing or otherwise making such TW Technology and/or TW's
Proprietary Rights available to any third party, and at least five (5) business
days prior to a meeting of the TWIN Board of Directors ("Board"), that TW wishes
to present such TW Technology and anticipated applications thereof to the Board
at such meeting. TW shall thereafter make such presentation to the Board,
providing appropriately detailed information and responding to Board member
questions, and the Licensors' respective representatives on the Board ("Licensor
Directors"), if any, shall vote on whether the TW Technology and/or TW's
Proprietary Rights are not Related to TWIN Business. For purposes of such
presentation and vote, TW shall have the right to call a special meeting of the
Board upon not less than ten (10) business days' notice. The effects of the vote
shall be as follows:
(a) UNANIMOUS "NOT RELATED" VOTE. If the Licensor Directors
AGREE UNANIMOUSLY that the TW Technology and/or TW's Proprietary Rights at issue
is NOT Related to TWIN Business (so as not to be subject to TW's license and
delivery obligations hereunder), then the TW Technology and/or TW's Proprietary
Rights shall be deemed not Related to TWIN Business and, effective as of the
date of the vote, such TW Technology and/or TW's Proprietary Rights shall not be
incorporated into this Agreement as TW Technology Related to TWIN Business. Such
unanimous vote of the Licensor Directors shall be binding on TW and TWIN.
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(b) OTHER VOTE. If the Licensor Directors vote in any other
way than as set forth in the immediately preceding subsection (a), then the TW
Technology and/or TW's Proprietary Rights shall be deemed Related to TWIN
Business and, effective as of the date occurring ten (10) business days after
the date of such vote, such TW Technology and/or TW's Proprietary Rights shall
be incorporated into this Agreement as TW Technology Related to TWIN Business
(and/or, as applicable, as TW's Proprietary Rights under which the licenses are
granted in Section 2.1 ("TW License")).
(c) DISPUTE RESOLUTION. Notwithstanding the foregoing, if
either Licensor believes any final vote, other than a unanimous vote pursuant to
subsection (a) above where such Licensor was represented by a Licensor Director
on the Board, was unreasonable, such Licensor may, by providing written notice
thereof to the other Parties within ten (10) business days of such vote, invoke
the dispute resolution procedure set forth in Section 16.5 ("Arbitration") and,
until such time as such dispute resolution procedure determines the issue, the
TW Technology and/or TW's Proprietary Rights at issue (a) shall not be deemed
incorporated into this Agreement as TW Technology Related to TWIN Business and
(b) shall not be used, licensed, disposed of or otherwise exploited by any
Person in the Territory (including without limitation by any of the Parties or
any of their successors, Subsidiaries, affiliates or licensees).
(d) NON-REPRESENTATION DURING VOTE. If at any time a Licensor
is not represented by a Licensor Director on the Board, such Licensor may invoke
the dispute resolution procedure in accordance with Section 2.6 (c) ("Dispute
Resolution") above if it believes any final vote was unreasonable. If neither
Licensor has a Licensor Director on the Board, then the entire Board shall vote
on whether any TW Technology and/or TW's Proprietary Rights is not Related to
TWIN Business in place of the Licensor Directors in accordance with the
procedures set forth in this Section 2.6, and, unless such vote is unanimous in
accordance with Section 2.6 (a) ("Unanimous `Not Related' Vote"), either
Licensor who believes such final vote was unreasonable may invoke the dispute
resolution procedure in accordance with Section 2.6 (c) ("Dispute Resolution").
2.7 TWIN RIGHT OF FIRST REFUSAL TO LICENSE OTHER TECHNOLOGY OF THE
LICENSORS. If IN develops after the Effective Date any IN Technology that is
Related to TWIN Business or TW develops after the Effective Date TW Technology
that is not Related to TWIN Business, and such Licensor proposes to disclose,
license or otherwise make such technology, and/or any associated Proprietary
Rights, available to any third party in the Territory, then such Licensor shall
promptly give written notice ("Notice") simultaneously to the other Parties,
describing in reasonable detail such technology, its potential applications and
the terms and conditions under which such Licensor is willing to license such
technology and/or associated Proprietary Rights to TWIN. For a period of thirty
(30) days following TWIN's receipt of the Notice, TWIN shall have the right to
accept, or (if Licensor is willing to negotiate) negotiate, finalize and accept,
the terms and conditions offered. If TWIN does not deliver written notice of
unconditional acceptance of the offered terms (or of the mutually agreed upon
negotiated terms) to the relevant Licensor within such thirty (30) day period
following its receipt of the Notice, then such Licensor shall have the right to
license such technology to third parties in the Territory on terms and
conditions no more favorable than those offered to TWIN.
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3. TRADEMARK LICENSE.
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3.1 LICENSE GRANT. Subject to all the terms and conditions of this
Agreement, TW hereby grants to TWIN a non-exclusive, non-transferable,
royalty-free license to (i) utilize the Licensed Marks solely in connection with
the marketing, promotion and supply of TWIN products and services incorporating
any TW Technology Related to TWIN Business in the Territory and (ii) modify the
Licensed Marks to include references to the United States or Canada (as
applicable) and perform other Localizations of the Licensed Marks subject to
TW's prior written consent (not to be unreasonably withheld), provided that the
use of all such modified Licensed Marks shall be subject to the terms and
conditions of this Agreement. The foregoing license shall become EXCLUSIVE (even
as against TW) effective as of the Approval Date, subject to Section 2.4
("Performance Criteria"), Section 8.3 ("Termination of Support Fees") and the
right of TW to grant licenses to the Licensed Marks in conjunction with its
license of Handset Technology to Casco Products International Inc. as permitted
by Section 7.3 (b) ("Casco Agreement"). No other rights to use the Licensed
Marks are granted by TW. TW shall have the right to terminate the license in any
Licensed Mark that is, or that TW reasonably believes may become, the subject of
an infringement claim.
3.2 QUALITY STANDARDS. TW shall establish reasonable quality standards
for the TWIN services and products provided under the Licensed Marks for the
purpose of protecting the Licensed Marks as provided herein, and TWIN will
comply with such standards. In addition, TWIN shall use best efforts to meet
TW's quality standards generally applicable to its licensees. TWIN shall comply
with such general quality standards as they may be amended from time to time by
TW in its sole discretion, provided that any such amendment is generally
applicable to TW's licensees offering similar services or products. TW will
provide reasonable written notice of any such amendment to TWIN and TWIN may use
previously complying materials until its stock runs out or for a period of six
(6) months after receipt of such notice, whichever is sooner.
3.3 USE GUIDELINES. TWIN will display the notice of trademark status
provided by TW with use of the Licensed Marks in each piece of advertising or
printed materials in which such Licensed Mark appears. Any co-branding or
private labeling shall be subject to TW's prior written approval (not to be
unreasonably withheld). TWIN acknowledges TW's ownership of the Licensed Marks,
and agrees that it will do nothing inconsistent with such ownership. All uses of
the Licensed Marks by TWIN shall inure to the benefit of and be on behalf of TW.
TW shall be solely responsible, at its own cost and expense, for filing
trademark applications in the Territory of the Licensed Marks, and shall,
promptly after the Effective Date, seek to register the trademark "Two Way TV"
or such substitute or other marks as the Licensors may agree upon in the United
States and Canada. After the Effective Date, TW shall apply to register such
other Licensed Marks in the Territory as TWIN may reasonably request from time
to time, which subsequent applications shall be at the cost and expense of TWIN
if made during the period the license under Section 2.1 ("TW License") is
exclusive. TWIN agrees to supply TW with specimens of TWIN's uses of the
Licensed Marks upon request.
4. DELIVERY OBLIGATIONS.
--------------------
4.1 TW DELIVERY.
11
(a) TW TECHNOLOGY DELIVERY. TW shall use its best efforts to
provide the Current TW Technology (including, without limitation, all source
code) in tangible form to TWIN as soon as reasonably practicable after the
Effective Date. TW shall also, on an on-going basis (subject to Section 8.3),
promptly upon the earlier of such item's availability, its distribution to any
third party, or the earliest practicable time in its development but in any
event no later than a beta version or, to the extent such item is used for
internal purposes, when available in a commercially useful, deliverable form,
provide to TWIN, in tangible form, all new TW Technology and TW's Proprietary
Rights that are Related to the TWIN Business (including without limitation, all
source code), and a reasonable number of samples of tangible embodiments based
on or incorporating such TW Technology and/or TW's Proprietary Rights, such as
circuits, hardware, semiconductor chips, devices, apparatus and tangible
products such as set-top boxes, keyboards and handsets, and improvements,
enhancements and upgrades to the TW Technology as well as know-how, in each case
only if Related to TWIN Business. Any improvement, enhancement, upgrade or
Derivative Work of or to Current TW Technology or TW Technology (including,
without limitation, bug fixes, new features and new products) already determined
to be Related to TWIN Business in accordance with the terms of this Agreement
shall be automatically deemed to be Related to TWIN Business and shall not be
subject to the provisions of Section 2.6 ("Determination of `Related to TWIN
Business'"). As part of its delivery obligation under this Section 4.1, TW shall
(subject to Section 8.3), on an ongoing basis, deliver to TWIN all relevant
market and test data derived from the U.K. rollout (e.g., if available and
relevant, test market data, churn rates, quality control numbers and reports,
content changes and developments, customer satisfaction reports, advertising
data and revenue data, set top box configurations, security codes and other
platform designs and configurations) and any other non-U.S. markets exploited
directly by TW or indirectly through its licensees and Subsidiaries, as
permitted by relevant agreements with third parties or Subsidiaries, as
appropriate. TW shall use its reasonable commercial efforts to include in any
and all relevant future agreements with third parties and Subsidiaries
provisions allowing TWIN access to and use of relevant market and test data
derived from such market rollouts.
(b) SOURCE CODE. TWIN agrees that TWIN will not modify the
source code of TW delivered in accordance with Section 4.1(a) ("TW Technology
Delivery") (hereinafter "TW Source Code") except in accordance with the
provisions of this Section 4.1(b) ("Source Code"). Except for urgent maintenance
purposes as described below, prior to modifying any TW Source Code TWIN shall
provide written notice of its proposed modification(s) to both Licensors and
obtain Board (as defined in Section 2.6) approval for such modification(s). For
purposes of obtaining the Board's prior approval of modifications to TW Source
Code, TWIN may call a special meeting of the Board upon not less than ten (10)
business days' prior notice to Licensors. At the Board meeting, TW shall make a
presentation to the Board, explaining the likely impact of the proposed
modification(s) on TW's support obligations and why it supports or,
alternatively, does not support such modification(s). The Board shall then
determine, by majority vote, whether TWIN may so modify the TW Source Code. The
effects of the vote shall be as follows:
(i) if the Board determines not to permit such
modification of the TW Source Code as proposed, no such modification will be
made to the TW Source Code by TWIN nor to the terms of this Agreement;
(ii) if the Board determines to permit such
modification of the TW Source Code, then TWIN may so modify the TW Source Code,
provided however that (x) if TW did not support such modification(s), then TW
shall have no obligation to provide technical support for the particular
modified source code (or any module containing the modified source code) to the
extent such modification(s) make it impractical to do so in the regular course
12
of business or preclude TW from providing support on commercially reasonable
terms; or (y) if TW did support such modification(s), then TWIN shall, when such
modification is complete, deliver a copy of the modification(s) ("Source Code
Derivative Work") to TW; TWIN shall grant to TW a non-exclusive, royalty-free,
nontransferable (except that TW may assign this Source Code Derivative Work
license in connection with a merger or sale of substantially all of its assets
subject to IN's prior written consent, not to be unreasonably withheld) license,
on an as-is basis, outside the Territory: (a) to internally use the source code
version of the Source Code Derivative Work solely for back-up, archival,
maintenance, and technical support purposes and (b) to reproduce, publicly
perform, publicly display, modify, distribute and otherwise use the object code
version of the Source Code Derivative Work, with a right to grant sublicenses
only to the object code version of the Source Code Derivative Work; TW shall
provide technical support to TWIN for such Source Code Derivative Work on the
same terms as TW supports TW Technology Related to TWIN Business; and any
modification(s) TW makes to such Source Code Derivative Work shall be deemed TW
Technology Related to TWIN Business, subject to the license and delivery
obligations of TW herein.
Notwithstanding the foregoing, TWIN shall have the right to modify the
TW Source Code without Board approval or notice to Licensors in the event TWIN
in good faith believes such modification(s) are necessary for urgent maintenance
purposes (e.g., to perform emergency fixes for a customer). In such event, TWIN
shall notify TW of the modification(s) it made as soon as reasonably practicable
thereafter, and, at the next regularly scheduled meeting of the Board, the Board
will be notified of such modification(s) and will have the right to require TWIN
to replace such urgent modification(s) with modification(s) that it determines
are preferable. If the Board does require replacement of such modification(s),
subsection (y) of Section 4.1(b)(ii) above (except for the condition that TW
supported such modification(s)) shall apply to such replacement modification(s).
If the Board does not require replacement of such modification(s), TW shall in
good faith determine whether it is practical to provide technical support in the
regular course of business for such modification(s), and, if not, whether to
offer to provide support on other terms. TWIN shall have no obligation to
deliver or license such Source Code Derivative Work to TW unless TW agrees to
provide such technical support on the same terms as TW supports TW Technology
Related to TWIN Business.
4.2 IN DELIVERY. IN shall provide to TWIN access to any readily
available historical market or test data Related to TWIN Business existing as of
the Effective Date. IN shall deliver to TWIN, as soon as reasonably practicable
after the Effective Date, a copy of each IN Patent, and records related to
filings and approvals thereof. IN shall deliver to TWIN, as soon as reasonably
practicable after the Approval Date, such documents and other information
necessary, in IN's reasonable determination, to enable TWIN to perform its
obligations, if any, under Sections 12.4 ("Enforcement in the Territory") and
7.2 ("NTN Transactions"), which documents and information shall be deemed the
Confidential Information of IN except to the extent such information is excluded
from the definition of Confidential Information pursuant to Section 11.1
("Non-disclosure; Non-use").
5. LICENSES FROM TWIN.
------------------
5.1 RIGHT OF FIRST REFUSAL TO LICENSE TWIN TECHNOLOGY. At the written
request of one or both Licensors to license certain TWIN Technology (and
associated Proprietary Rights) outside the Territory, which request shall be
sent simultaneously to the other Parties, TWIN shall license such TWIN
Technology to the interested Licensor(s) for exploitation outside the Territory
13
on such terms and conditions as are negotiated between TWIN and the interested
Licensor(s) on an arm's length basis, in accordance with the provisions set
forth below. The following provisions shall not apply to any Source Code
Derivative Works licensed to TW in accordance with Section 4.1(b) ("Source
Code"). In any country where only one Licensor already actively markets products
or services, that Licensor shall have the right of first refusal to enter into
an exclusive license in such country. If both Licensors actively market products
or services in a particular country, each Licensor shall have the opportunity to
enter into a (non-exclusive) license in that country on substantially the same
terms and conditions as provided to the other Licensor (unless otherwise agreed
by the Parties), but TWIN shall not make such TWIN Technology (or associated
Proprietary Rights) available to any third party in that country. In a country
where neither Licensor actively markets products or services, both Licensors are
free to negotiate for an exclusive or non-exclusive license from TWIN for the
TWIN Technology after receipt of the notice described in the first sentence of
this Section 5.1. Prior to licensing the TWIN Technology (or TWIN Proprietary
Rights) in a particular country to a third party, TWIN shall provide the
Licensors with thirty (30) days' prior written notice of its intent to license
such TWIN Technology and/or Proprietary Rights to a third party. If either
Licensor delivers written notice to TWIN within such period stating that it
desires to enter into a license with respect to such TWIN Technology and/or
Proprietary Rights in such country ("Request to License"), TWIN shall negotiate
exclusively and in good faith with such Licensor (or both Licensors, if both
deliver such notice) for a period of sixty (60) days after such thirty (30) day
notice period, and if no agreement is reached within such sixty (60) day period,
TWIN shall have no further obligation to Licensors and may proceed to license to
third parties, provided, however, that any such license to a third party shall
be on no better terms to such third party than those that were last proposed by
TWIN to the applicable Licensor(s) pursuant to the negotiations described in
this sentence. If neither Licensor delivers a Request to License to TWIN within
such thirty (30) day period, TWIN shall have no further obligation to Licensors
and may proceed to license to third parties.
5.2 NOTICE OF TWIN TECHNOLOGY. TWIN agrees that it will, within a
reasonable time after the development thereof, inform Licensors of any
significant TWIN Derivative Works, other than Localizations.
6. SUPPORT AND TRAINING.
--------------------
6.1 TW SUPPORT. TW shall provide to TWIN initial transition services
and on-going technical training and support services as described in more detail
in EXHIBIT F (collectively, "Support") in connection with the TW Technology
licensed to TWIN hereunder. Such Support shall be provided in accordance with a
schedule to be mutually agreed upon by TWIN and TW. "Support" shall include TW's
obligation to provide future TW Technology and associated Proprietary Rights to
TWIN in accordance with Section 4.1 ("Technology Delivery"). TW shall have no
obligation to provide technical support of any TWIN modifications to TW Source
Code under this Section 6.1 ("TW Support"), except as provided in Section 4.1(b)
("Source Code"). IN shall have no training, maintenance or support obligations
under this Agreement.
6.2 OTHER SERVICES. From time to time, TWIN may request and TW shall,
where reasonably possible, provide additional services other than those
described in Section 6.1 ("TW Support") upon terms and conditions as agreed
between TW and TWIN and negotiated on an arm's-length basis. If, in the future,
TWIN intends to develop new software functionality based on any TW software
licensed to TWIN hereunder, TWIN may notify TW of such intention and, if TW is
14
already developing such functionality, TW will provide such functionality to
TWIN at no charge as soon as available and if TW is not developing such
functionality, TW and TWIN may enter into good faith negotiations on an
arm's-length basis to enter into a development services and/or support agreement
whereby TWIN would hire TW to develop such functionality for TWIN and/or provide
technical support for such functionality. The Parties agree and acknowledge that
TWIN shall have no obligation to hire TW for development projects or special
support services.
6.3 VISITS TO TWIN FACILITY. Each Licensor shall be permitted to have a
limited number of engineers and technical personnel visit or temporarily work at
TWIN's facilities at such Party's own cost (subject to Section 6.2 ("Other
Services")) in order to assist TWIN and to enhance information exchange between
TWIN and Licensors. The number of engineers and technical personnel, and length
of their visits, shall be subject to TWIN's prior reasonable approval.
7. OTHER LICENSOR OBLIGATIONS.
--------------------------
7.1 NON-COMPETE OBLIGATIONS.
(a) NON-COMPETE DURING EXCLUSIVITY. The following provisions
of Section 7.1(a) ("Non-compete During Exclusivity") shall become effective on
the Approval Date and shall remain in effect thereafter, with respect to a
particular Licensor, only for so long as the license granted by such Licensor in
Section 2.1 ("TW License") or Section 2.2 ("IN License"), as applicable, is
EXCLUSIVE, and subject to termination pursuant to Section 8.3 ("Termination of
Exclusivity and Support Fees"):
Licensor agrees not to compete directly or indirectly (except
as provided in Section 7.1(c) below) with TWIN in the
Territory for so long as any of such Licensor's license grants
to TWIN set forth in Section 2 ("Licenses to TWIN") remains in
effect and has not been transferred or assigned by TWIN to any
third party.
(b) NON-COMPETE DURING NON-EXCLUSIVITY. The following
provisions of Section 7.1(b) ("Non-compete During Non-exclusivity") shall become
effective on the Effective Date and shall remain in effect thereafter, with
respect to a particular Licensor, only for so long as the license granted by
such Licensor in Section 2.1 ("TW License") or Section 2.2 ("IN License"), as
applicable, is NON-EXCLUSIVE (including without limitation, during such periods
after the Approval Date when such Licensor's licenses have been converted from
exclusive to non-exclusive in accordance with the terms herein):
Licensor agrees not to compete directly with TWIN in the
Territory for so long as any of such Licensor's license grants
to TWIN set forth in Section 2 ("Licenses to TWIN") remains in
effect and has not been transferred or assigned by TWIN to any
third party, but Licensor shall have the right to grant
sublicenses to such Licensor's technology and Proprietary
Rights to unaffiliated Persons in the Territory.
15
(c) IN RIGHT TO CONDUCT BUSINESS. Notwithstanding any
provision herein or in any Associated Agreement to the contrary, IN shall, in
any event, have the right to create or develop a business and engage in business
activities within or outside the scope of the TWIN Business, provided that such
business activities do not directly compete with the then-current primary
business activities of TWIN. By way of example but not limitation, in any event,
IN shall have the right to perform content production services for TWIN or for
any third party in the Territory.
7.2 NTN TRANSACTIONS.
(a) ASSIGNMENT OF NTN LICENSES. TW acknowledges that it has
had an opportunity to review a copy of the Patent License Agreement between IN
and NTN Communications, Inc. ("NTN") and the subsequent amendment thereto listed
in EXHIBIT E ("NTN Licenses"), which agreements shall be deemed the Confidential
Information of IN disclosed to TW for use only for the purposes set forth in
this Section 7.2(a). TW shall have a period of sixty (60) days following the
Effective Date to determine, and notify the other Parties in writing as to,
whether it believes it is in the best interests of TWIN for IN to assign the NTN
Licenses to TWIN. If TW provides such notice that such agreements should not be
assigned to TWIN, then this Section 7.2 shall be deemed removed from this
Agreement and shall have no further force and effect. Such election not to
assign shall not modify or alter any other TW obligation in this Agreement,
including without limitation those set forth in Section 7.3 ("Handset
Technology"). In any other event, IN will, as soon as practicable following the
Approval Date, assign to TWIN the NTN Licenses.
(b) MANAGEMENT OF LITIGATION. This Section 7.2 (b) shall take
effect only if IN assigns the NTN Licenses to TWIN in accordance with Section
7.1(a). IN will assign to TWIN the right to manage the actual NTN-related
litigation listed on EXHIBIT G as well as the right to enforce the IN Patents
against NTN in the Territory in the future and to sue NTN for damages in the
future. From the proceeds of any settlement, award or license resulting from the
actual litigation listed on EXHIBIT G, TWIN will reimburse IN for any and all
expenses incurred by IN in connection with such litigation, licenses and
associated settlement efforts, whether incurred prior to or after the date TWIN
took over management of such litigation and including all such expenses incurred
by IN in cooperating with TWIN in such litigation, settlement and licensing. If
required by applicable law, IN agrees to be joined as a party (whether as
plaintiff or as defendant) in any future patent infringement litigation
proceedings (in which TWIN is a party) arising out of or in connection with any
of the IN Patents instituted by or against NTN. The final outcome of such
litigation and/or settlement as it pertains to the IN Patents in the Territory
will be binding on TWIN and IN and the benefit of any license including future
royalties (except for the use of proceeds from the license to reimburse IN for
its associated expenses, as described above) will accrue to TWIN. Any and all
recoverable damages, costs, awards, judgments, or settlement funds derived from
existing litigation for past acts by NTN will go directly to IN. Notwithstanding
the foregoing, any settlement terms with NTN must be approved in writing by IN.
TWIN agrees to execute such documents as necessary to effect the foregoing
arrangement with IN's counsel in Canada currently handling the litigation listed
on EXHIBIT G.
7.3 HANDSET TECHNOLOGY.
------------------
(a) LICENSE GRANT TO TW LICENSEES. TWIN understands that
handset manufacturers outside the Territory may wish to obtain licenses to the
Handset Technology from TW pursuant to which they can exploit the Handset
Technology in multiple jurisdictions. If, following the Approval Date, any such
potential TW licensee desires to exploit the Handset Technology in the Territory
or any part thereof and TWIN receives written notice of such desire, TWIN agrees
16
to enter into good faith negotiations with TW or such licensee, as appropriate,
to enter into a licensing arrangement whereby TWIN would grant a non-exclusive
license to exploit the Handset Technology in the Territory directly to such
third party or license such right to TW for further sublicensing to such third
party, in either case on terms and conditions mutually agreeable to TWIN and the
party with whom TWIN is contracting. Notwithstanding the foregoing, if,
following the Approval Date, TWIN is already exploiting (or has documented plans
to exploit within nine (9) months) the Handset Technology in the same market
segment at the time of receipt of the notice or is already under contract with a
direct competitor of the third party in the Territory with respect to the
Handset Technology, TWIN shall have no obligation to negotiate with or license
the Handset Technology to any such third party. Promptly after the later of (i)
execution by TW of any agreement which grants any rights or licenses to the
Handset Technology in the Territory and (ii) the Approval Date, TW shall assign
to TWIN all of TW's revenues under such agreement(s) which are derived from the
Territory (including, without limitation, sales of units in and to the Territory
and all sublicense income with respect to the Territory) and all of TW's
licenses and rights thereunder which may be exercised in or with respect to the
Territory.
(b) CASCO AGREEMENT. The Parties acknowledge that, as of the
Effective Date, TW is in negotiations to conclude an agreement with Casco
Products International Inc. ("Casco") whereby Casco would license certain
Handset Technology for use in the Territory. TW agrees to keep IN informed of
the progress of negotiations, introduce IN to Casco, permit IN to review the
license agreement prior to execution and to otherwise work with IN to finalize
the license agreement. Promptly after the later of (i) execution of such
agreement by TW and Casco and (ii) the Approval Date, TW shall assign to TWIN
all of TW's revenues thereunder (including without limitation those accrued
prior to the Approval Date) which are derived from the Territory (including,
without limitation, sales of units in and to the Territory and all sublicense
income with respect to the Territory) and all of TW's licenses and rights
thereunder which may be exercised in or with respect to the Territory.
(c) EXPLOITATION IN TERRITORY. TWIN will undertake to exploit
the Handset Technology in the Territory under its licenses to TW Technology
Related to TWIN Business hereunder. If TWIN is not exploiting the Handset
Technology under its licenses to TW Technology Related to TWIN Business
hereunder in any particular market within the Territory, TW notifies TWIN in
writing ("Handset Notice") that TW desires to exploit the Handset Technology in
such market, and TWIN does not notify TW in writing within sixty (60) days of
TWIN's receipt of the Handset Notice that TWIN has documented plans to exploit
such market within nine (9) months of receipt of the Handset Notice, then TWIN
shall thereafter grant to TW a non-exclusive license to exploit the Handset
Technology in such specific market, provided that TWIN shall also retain the
non-exclusive right to exploit the Handset Technology in such market under
Section 2.1 ("TW License").
7.4 COOPERATION DURING INITIAL NON-EXCLUSIVITY. During the period
between the Effective Date and the Approval Date, each Licensor agrees (i) to
consult with each another and with TWIN with respect to any licenses or other
rights such Licensor may consider granting or may actually grant in the
Territory, (ii) to disclose to any such potential licensee that such license
might be assigned to TWIN, (iii) to include in any such license appropriate
provisions permitting such assignment and (iv) to assign any and all such
licenses (including without limitation revenues accrued thereunder prior to the
Approval Date other than payments for services actually provided prior to the
Approval Date) to TWIN as soon as practicable following the Approval Date.
17
8. PAYMENTS.
--------
8.1 ROYALTIES. The licenses set forth in Sections 2 ("Licenses to
TWIN") and 3 ("Trademark License") shall be royalty-free.
8.2 SUPPORT FEES. In consideration of the Support services provided
under Section 6.1 ("TW Support"), TWIN agrees to pay to TW fees ("Support Fees")
of four percent (4%) of its Gross Revenues received prior to the fifth (5th)
anniversary of the Effective Date, and three percent (3%) of its Gross Revenues
received thereafter.
8.3 TERMINATION OF EXCLUSIVITY AND SUPPORT FEES. At any time, subject
to IN's prior written approval, TWIN may elect to terminate the Support
obligations of TW under Section 6.1 ("TW Support") and any remaining obligations
under Section 4.1 ("TW Delivery") that were not required to be performed as of
the date of that termination along with TWIN's accompanying Support Fees payment
obligation, provided that (i) TWIN provides to Licensors sixty (60) days'
advance written notice of its intent to terminate; and (ii) TWIN pays to TW all
Support Fees owed through the date of such election. From such date of election,
(a) TW shall have no further obligations under Section 6.1 or Section 4.1, (b)
TWIN's license to the TW Technology under Section 2.1 ("TW License") and to the
Licensed Marks under Section 3 ("Trademark License") shall automatically convert
to non-exclusive, and (c) TW shall be released from its non-compete obligations
in Section 7.1(a) ("Non-compete During Exclusivity").
8.4 PAYMENT AND REPORTS. All Support Fees payable under Section 8.2
("Support Fees") shall be payable quarterly within sixty (60) days after the end
of each quarter of TWIN's fiscal year. On or before the date of such payment
TWIN shall send to IN and TW a report describing the basis for its payment
calculation. Notwithstanding the foregoing, in recognition of the need for TWIN
to attract funding from third parties, TWIN shall have the right to delay
payment of Support Fees to TW hereunder until the end of the quarter during
which cumulative Gross Revenues exceeds Ten Million U.S. Dollars (US$10
million).
8.5 DIRECT EXPENSE REIMBURSEMENT. TWIN shall reimburse TW for all
reasonable actual incremental direct costs incurred by TW in providing the
initial transition services under Section 6.1 ("Support"), including the fees
paid to third-party consultants, and out-of-pocket costs of travel and
accommodations for such consultants and TW personnel sent to the United States
incurred in connection with providing the transition services, but not including
salaries of any TW personnel, up to a maximum amount of US$150,000, which amount
may be increased by mutual agreement of Licensors. TWIN shall pay such costs to
TW within thirty (30) days of receipt of the invoice therefor issued by TW,
provided, however, that TWIN may deduct any such amounts paid for costs from any
future Support Fees payable to TW pursuant to Section 8.2 ("Support Fees").
8.6 CURRENCY. All payments made hereunder shall be free and clear of
all deductions, withholding taxes or other charges, except as provided in
Section 9, and shall be made by TWIN in U.S. dollars by wire transfer to a bank
account(s) designated by TW, unless otherwise mutually agreed upon. Any currency
conversion required in connection with payment to TW shall be at the rate
received by TWIN at the time of such payment from the bank it utilizes to make
such payment.
8.7 AUDIT. TW shall have the right, at its own expense, upon reasonable
notice and at reasonable times, but not more than once each fiscal year, to
inspect, through an independent auditor or another person reasonably acceptable
18
to TWIN, TWIN's records for the purpose of verifying the accuracy of TWIN's
calculations of fees payable hereunder. Should TWIN's calculations be more than
five percent (5%) less than such auditor's or other person's calculations, TWIN
shall be responsible for the reasonable expenses of such audit. TWIN shall keep
records showing the TWIN products, services and technology sold, licensed or
otherwise disposed of in connection with the licenses granted herein and the
calculation of Gross Revenues in sufficient detail to enable the fees payable to
TW to be determined. Such records shall be maintained for a period of at least
three (3) years after the date when payment is due by TWIN.
8.8 THIRD-PARTY LICENSE FEES. In the event IN or TW, as the case may
be, is required to pay a fee to a third party pursuant to any license agreement
or amendment to an existing license agreement for sublicensing such third
party's intellectual property rights to TWIN, TWIN shall be responsible for such
fee to the extent such fee is a separate royalty on sales or other use by TWIN.
Where such fee is part of a general lump sum payment, the sublicensing Licensor
and TWIN shall agree upon a mutually acceptable allocation of such payment.
9. TAXATION.
--------
9.1 WITHHOLDING TAX. If required by Applicable Law, TWIN may withhold
income tax from any payment to TW. In the case of such withholding, TWIN shall,
(i) without delay, pay the withheld tax to the appropriate tax office and
furnish TW with appropriate evidence of the tax payment and (ii) increase the
amount payable by TWIN to TW hereunder to such amount which, after making all
required withholdings or deductions of withholding taxes therefrom, will equal
the amount payable hereunder had no such withholdings or deductions been
required. TWIN shall indicate on each statement the amount of payment thereunder
which represents TWIN's gross-up to cover required withholding taxes, if any.
Should TW be able, within the maximum period allowable by law, to utilize as a
tax credit an amount which has been paid by TWIN for such withholding taxes, TW
will notify TWIN of the amount which it is able to utilize as a tax credit and
TWIN may deduct such amount from any future payments owed to TW.
9.2 OTHER TAXES. TWIN shall bear all sales, use and other governmental
taxes or transaction charges imposed in any jurisdiction which arise in
connection with the delivery to or use by TWIN of TW Technology or IN Patents,
or the manufacture or sale of TWIN products, services and technology by TWIN
hereunder. The Parties will make reasonable commercial efforts to cooperate as
necessary to take advantage of such double taxation treaties as may be available
and to minimize the amount of taxes owed by either Party in connection with this
Agreement.
10. INTELLECTUAL PROPERTY RIGHTS.
----------------------------
10.1 TWIN RIGHTS. TWIN shall own all right, title and interest in and
to the TWIN Technology and TWIN Derivative Works (subject to Licensors'
respective ownership interests in IN's Proprietary Rights, IN Technology, TW's
Proprietary Rights, TW Technology and Licensed Marks incorporated therein). TWIN
shall have the right, at its own expense, and solely in its own name, to apply
for, prosecute and defend its Proprietary Rights with respect to the TWIN
Technology and TWIN Derivative Works. Licensors agree to cooperate with TWIN to
aid in any application for registration and protection of such TWIN Derivative
Works, and all Proprietary Rights therein, at TWIN's expense. As between
Licensors and TWIN, except for the express licenses granted herein, Licensors
and their respective licensors shall retain and own all right, title and
interest in and to the TW Technology, IN Patents, IN Technology, and all
Proprietary Rights thereto.
19
10.2 TW RIGHTS. As among the Parties, except for and to the extent of
the express licenses granted herein, TW and its licensors shall retain and own
all right, title and interest in and to the Current TW Technology, TW Technology
Related to the TWIN Business, the Licensed Marks, and all Proprietary Rights
thereto.
10.3 IN RIGHTS. As among the Parties, except for and to the extent of
the express licenses granted herein, IN and its licensors shall retain and own
all right, title and interest in and to the IN Patents and all Proprietary
Rights thereto.
11. CONFIDENTIALITY.
---------------
11.1 NON-DISCLOSURE; NON-USE. Except as expressly authorized among the
Parties, (including, without limitation, the exercise of the rights granted to a
Party under this Agreement), each Party agrees not to disclose, use or permit
the disclosure or use by others of any other Party's Confidential Information,
unless and to the extent such Confidential Information (i) becomes a matter of
public knowledge through no action or inaction of the Party receiving the
Confidential Information, (ii) was in the receiving Party's possession under no
duty of confidentiality before receipt from the Party providing such
Confidential Information, (iii) is rightfully received by the receiving Party
from a third party without any duty of confidentiality, (iv) is disclosed to a
third party by the Party providing the Confidential Information without a duty
of confidentiality on the third party, (v) is disclosed with the prior written
approval of the Party providing such Confidential Information, or (vi) is
independently developed by employees, agents or subcontractors of the receiving
Party who had no access to and without any use of the other Party's Confidential
Information. Information shall not be deemed to be available to the general
public for the purpose of exclusion (ii) above with respect to each Party (x)
merely because it is embraced by more general information in the prior
possession of recipient or others, or (y) merely because it is expressed in
public literature in general terms not specifically in accordance with the
Confidential Information.
11.2 CARE OF CONFIDENTIAL INFORMATION. In furtherance, and not in
limitation of the foregoing Section 11.1, each Party agrees to do the following
with respect to any such other Party's Confidential Information: (i) exercise
the same degree of care to safeguard the confidentiality of, and prevent the
unauthorized use of, such information as that Party exercises to safeguard the
confidentiality of its own similar information, (ii) restrict disclosure of such
information to those of its employees, agents and sublicensees who have a "need
to know", and (iii) instruct and require such employees, agents and sublicensees
to maintain the confidentiality of such information and not to use such
information except as expressly permitted herein. Each Party further agrees not
to remove or destroy any proprietary or confidential legends or markings placed
upon any documentation or other materials of any other Party.
11.3 TERMS OF AGREEMENT. The foregoing confidentiality obligations
shall also apply to the terms and conditions of this Agreement and the
Associated Agreements.
11.4 REQUIRED DISCLOSURE. The obligations under this Section 11 shall
not prevent the Parties from disclosing the Confidential Information or the
terms of this Agreement to its legal and financial advisors or potential
investors, in each case subject to confidentiality provisions no less
20
restrictive than those contained herein, or to any government agency, regulatory
body or stock exchange authorities as required by law (provided that the Party
intending to make such disclosure in such circumstances has given prompt notice
to the Party providing such Confidential Information prior to making such
disclosure so that such Party may seek a protective order or other appropriate
remedy prior to such disclosure and cooperates fully with such other Party in
seeking such order or remedy) or as required to fulfill government filing or
regulatory body or stock exchange requirements.
11.5 TERM OF CONFIDENTIALITY. The obligations under this Section 11
shall apply with respect to any Confidential Information for a period of ten
(10) years from the date of disclosure of such Confidential Information to the
receiving Party, unless, with respect to any particular Confidential
Information, the providing Party in good faith notifies the receiving Party that
a longer period shall apply, in which case the obligations under this Section 11
with respect to such Confidential Information shall apply for such longer
period. Notwithstanding the foregoing, the obligations under this Section 11
with respect to the source code of any Party and any information that
constitutes a Trade Secret will continue until the source code or information no
longer constitutes a Trade Secret.
11.6 INJUNCTIVE RELIEF. Notwithstanding Section 16.5 ("Arbitration"),
the Parties agree that any material breach of Sections 2 ("License to TWIN"),
7.1 ("Non-compete Obligations") and 11 ("Confidentiality") of this Agreement may
cause irreparable injury for which no adequate remedy at law exists; therefore,
the parties agree that equitable remedies, including without limitation
injunctive relief and specific performance, are appropriate remedies to redress
any such breach or threatened breach of this Agreement, in addition to other
remedies available to the Parties. If any legal action is brought under this
Section 11.6 ("Injunctive Relief"), the prevailing Party shall be entitled to
receive its attorneys' fees, court costs and other collection expenses, in
addition to any other relief it may receive. Each Party expressly waives the
defense that a remedy in damages will be adequate and any requirement in an
action for specific performance or injunction for the posting of a bond by the
Party seeking relief.
12. INDEMNIFICATION.
---------------
12.1 TW OBLIGATION. TW shall defend, indemnify and hold harmless TWIN,
IN and their officers, shareholders, and employees from and against all costs,
expenses and losses (including reasonable attorneys' fees and costs) (i)
incurred through claims of any third parties against TWIN or IN based on a
breach by TW of any representation and warranty made in this Agreement and (ii)
arising out of any court ruling, arbitral ruling, judgment, or settlement
arising out of any claim that any TW Technology licensed to TWIN hereunder or
its use as permitted hereunder infringes or misappropriates any copyright, trade
secret, U.S. or Canadian nationally registered trademarks or other Proprietary
Rights (other than Patents) of any third party. TW shall have no obligation to
indemnify, hold harmless or defend, and shall have no liability for, any claim
of infringement or misappropriation to the extent any such claim is based on
modification of the TW Technology other than by or for TW where, absent such
modification, no valid claim would exist. If a final injunction against TWIN's
use of any of the TW Technology results from a claim of infringement or
misappropriation (or, if TW reasonably believes such a claim is likely), TW
shall, at its sole expense and option, obtain for TWIN the right to continue
using the subject TW Technology or replace or modify it so it becomes
noninfringing but functionally equivalent; if TWIN continues to use the
infringing TW Technology after receipt of such replacement or modification, TW
shall have no indemnification obligation for such further use.
21
12.2 IN OBLIGATION. IN shall defend, indemnify and hold harmless TWIN
and TW and their officers, shareholders, and employees from and against all
costs, expenses and losses (including reasonable attorneys' fees and costs)
incurred through claims of third parties against TWIN based on a breach by IN of
any representation and warranty made in this Agreement.
12.3 CONDITION TO OBLIGATIONS. The indemnification obligations herein
are contingent upon (i) the indemnified Party giving prompt written notice to
the indemnifying Party(s) of any such claim, (ii) the indemnified Party allowing
the indemnifying Party(s) to control the defense and settlement of any such
claim, and (iii) the indemnified Party fully assisting, at the indemnifying
Party's (or Parties') expense, in the defense; provided, however, that without
relieving the indemnifying Party(s) of its (or their) obligations hereunder or
impairing the indemnifying Party's(s') right to control the defense or
settlement thereof, the indemnified Party may elect to participate through
separate counsel in the defense of any such claim, but the fees and expenses of
such counsel shall be at the expense of the indemnified Party unless (a) the
employment of counsel by the indemnified Party has been authorized in writing by
the indemnifying Party(s), (b) the indemnified Party shall have reasonably
concluded that there exists a material conflict of interest between the
indemnified Party and the indemnifying Party(s) in the conduct of the defense of
such claim (in which case such conflicted indemnifying Party(s) shall not have
the right to control the defense or settlement of such claim on behalf of the
indemnified Party) or (c) the indemnifying Party(s) shall not have employed
counsel to assume the defense of such claim within a reasonable time after
notice of the commencement thereof. In each of such cases the reasonable fees
and expenses of counsel shall be at the expense of the indemnifying Party(s).
12.4 ENFORCEMENT IN THE TERRITORY. The following provisions of this
Section 12.4 ("Enforcement in the Territory") shall become effective on the
Approval Date and shall remain in effect thereafter, with respect to a
particular Licensor and its Proprietary Rights licensed hereunder, only for so
long as the license granted by such Licensor in Section 2.1 ("TW License") or
Section 2.2 ("IN License"), as applicable, is exclusive:
The Parties agree that, commencing as of the Approval Date,
TWIN shall be responsible for, and shall bear all costs of
(including without limitation attorneys' fees), policing,
protecting and enforcing in the Territory all Proprietary
Rights of the Licensors (whether existing as of the Approval
Date or coming into existence thereafter) which are
exclusively licensed to TWIN hereunder, but such obligation
shall continue for each Proprietary Right only for so long as
such Proprietary Right remains subject to an exclusive license
grant hereunder. TWIN agrees to make its best efforts to
fulfill this obligation. If TWIN fails, for any reason, to
fulfill this obligation adequately, in the good faith judgment
of the Licensor owner of the affected Proprietary Right, such
Licensor shall have the right to, upon fifteen (15) days'
prior written notice to TWIN, take whatever action it deems
appropriate and TWIN will fully cooperate therewith; provided,
however, that if TWIN fulfills this obligation during such
15-day period, then such Licensor shall not have such right.
22
In the event a Licensor exercises such right in accordance
with this Section 12.4, such Licensor shall bear all expenses
of such action and receive all benefits (which may include
money damages and cross-licenses) that may result therefrom.
Notwithstanding the foregoing, TWIN shall not take any formal
legal action on account of any suspected or actual
infringement or in response to any claim challenging any
Proprietary Right of a Licensor without the prior written
consent of the relevant Licensor, which consent shall not be
unreasonably withheld.
12.5 NOTICE OF THIRD PARTY INFRINGEMENT. If any Party becomes aware of
any product, service or activity of any third party that involves actual or
suspected infringement or violation of any Licensor Proprietary Rights in the
Territory, whether or not subject to an exclusive license grant hereunder, such
Party shall promptly notify the other Parties in writing of such infringement or
violation. TWIN shall keep the other Parties apprised of any action TWIN takes
in accordance with Section 12.4 ("Enforcement in the Territory").
13. WARRANTIES.
----------
13.1 REPRESENTATIONS AND WARRANTIES OF TW. TW represents, warrants and
agrees that (unless otherwise expressly stated):
(i) as of the Effective Date, it is a corporation
duly organized, validly existing and in good standing under the laws of England
and Wales, it has the corporate power and is authorized under its memorandum and
articles of association to carry on its business as now conducted, and it is
qualified to transact business and is in good standing in England and Wales;
(ii) as of the Effective Date, it has performed all
corporate actions and received all corporate authorizations necessary to execute
and deliver this Agreement and to perform its obligations hereunder and this
Agreement is valid, binding and enforceable against it (subject to applicable
principles of equity and bankruptcy and insolvency laws);
(iii) as of the Effective Date, it has and shall
maintain the power and authority and all material governmental licenses,
authorizations, consents and approvals to be obtained within England to own its
assets, carry on its business and to execute, deliver, and perform its
obligations under this Agreement (but only to the extent that failure to do so
would have a material adverse effect on the TWIN Business; but the foregoing
does not include any representation regarding the operation of TWIN, as to which
TW makes no representation);
(iv) as of the Effective Date, there are no (A)
non-governmental third parties or (B) governmental or regulatory entities in
England and Wales or the United States who are entitled to any notice of the
transaction, licenses and services contemplated hereunder or whose consent is
required to be obtained by TW for the consummation of the transaction
contemplated hereunder;
(v) it and its licensors are the sole and rightful
owners of all right, title and interest in and to the TW Technology and the
Licensed Marks and all related Proprietary Rights therein and, other than the
necessary third-party consents set forth in EXHIBIT D which relate to immaterial
23
portions of the TW Technology, it has the unrestricted right to market, license
and exploit the TW Technology and the Licensed Marks, including the right to
grant the licenses granted to TWIN hereunder;
(vi) the TW Technology as delivered does not infringe
or misappropriate any third-party Copyright or Trade Secret rights;
(vii) as of the Effective Date, to the best of its
knowledge, (a) no claims have been made in respect of the TW Technology or
Licensed Marks and no demands of any third party have been made pertaining to
them, and (b) no proceedings have been instituted or are pending or threatened
that challenge the rights of TW in respect thereof;
(viii) all software, firmware and systems containing
software or firmware licensed to TWIN hereunder (collectively, "Software
Systems") shall accurately and automatically handle and process all dates
(including without limitation all leap years), date values, and date-related
data, including, without limitation, interpreting, calculating, comparing and
sequencing and prior to, during, and after January 1, 2000; and
(ix) all Software Systems shall substantially conform
to the applicable user's manual, if any, specifications, and documentation
delivered to TWIN in connection with each such Software System; and
(x) upon the request of TWIN, following the Effective
Date TW will commence to deliver, and by completion of the initial transition
services will complete delivery of, all of the Current TW Technology.
13.2 REPRESENTATIONS AND WARRANTIES OF IN. IN represents, warrants and
agrees that (unless otherwise expressly stated):
(i) as of the Effective Date, it is a corporation
duly organized and validly existing under the laws of California, it has the
corporate power and is authorized under its Certificate of Incorporation and its
Bylaws to carry on its business as now conducted, and it is qualified to
transact business and is in good standing in California;
(ii) as of the Effective Date, it has performed all
corporate actions and received all corporate authorizations necessary to execute
and deliver this Agreement and to perform its obligations hereunder and this
Agreement is valid, binding and enforceable against it (subject to applicable
principles of equity and bankruptcy and insolvency laws);
(iii) as of the Effective Date, it has and shall
maintain the power and authority and all material governmental licenses,
authorizations, consents and approvals to be obtained within the United States
to own its assets, carry on its business and to execute, deliver, and perform
its obligations under this Agreement (but only to the extent that failure to do
so would have a material adverse effect on the TWIN Business; but the foregoing
does not include any representation regarding the operation of TWIN, as to which
IN makes no representation;
(iv) as of the Effective Date, there are no (A)
non-governmental third parties or (B) governmental or regulatory entities in the
United States who are entitled to any notice of the transaction, licenses and
services contemplated hereunder or whose consent is required to be obtained by
IN for the consummation of the transaction contemplated hereunder;
24
(v) to the best of its knowledge after due inquiry,
other than the third-party licenses set forth in EXHIBIT E and the rights
granted therein, it and its licensors are the sole and rightful owners of all
right, title and interest in and to the IN Patents and it has the unrestricted
right to license the IN Patents, including the right to grant the licenses
granted to TWIN hereunder, provided, however, that the knowledge qualifier
modifying this representation shall be deemed deleted from this representation
during any period when the license granted by IN in Section 2.2 ("IN License")
is exclusive;
(vi) as of the Effective Date, to the best of its
knowledge, other than claims asserted respectively by NTN Communications, Inc.
and David B. Lockton in connection with the litigation listed in EXHIBIT G, (a)
no unresolved claims have been made in respect of the IN Patents and no demands
of any third party have been made pertaining to them, and (b) no proceedings
have been instituted or are pending or threatened that challenge the rights of
IN in respect thereof; and
(vii) as of the Effective Date, the list of patents
and patent applications in EXHIBIT A comprise all of IN's patents issued in the
Territory prior to the Effective Date and all of IN's patent applications filed
in the Territory prior to the Effective Date.
13.3 REPRESENTATIONS AND WARRANTIES OF TWIN. TWIN represents, warrants
and agrees that:
(i) it is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation and it has the
corporate power and is authorized under its charter and organizational documents
to carry on its business as now conducted; and
(ii) it has performed all corporate actions and
received all corporate authorizations necessary to execute and deliver this
Agreement and to perform its obligations hereunder and this Agreement is valid,
binding and enforceable against it (subject to applicable principles of equity
and bankruptcy and insolvency laws).
13.4 NO WARRANTY OF VALIDITY. Nothing in this Agreement shall be
construed as (a) a warranty or representation by IN or TW as to the validity of
any IN Patent or any of TW's Patents, respectively, or (b) a warranty or
representation that anything made, used, sold or otherwise disposed of under any
license to the IN Patents or TW's Patents is or will be free from infringement
of patents of third parties.
13.5 SOLE REMEDY. In the event of any breach by IN of Section 13.2(v),
the other Parties shall, as their sole and exclusive remedy for such breach,
have the right to seek monetary damages if the breach is material. For purposes
of this provision, "material" shall mean the breach directly caused actual
monetary losses (not including attorneys' fees) to a Party of Five Hundred
Thousand U.S. Dollars (US$500,000) or more. If IN and/or a Party claiming
monetary damages under this provision disagree as to the amount of damages or
whether a breach is material, such disagreement shall be resolved in accordance
with the provisions of Section 16.5 ("Arbitration"). For the sake of clarity, no
Party shall have the right to terminate this Agreement, terminate any license(s)
hereunder, or seek any other remedy for breach of Section 13.2(v) other than the
sole and exclusive remedy set forth in this Section 13.5 ("Sole Remedy").
25
14. DISCLAIMER; LIMITATION OF LIABILITY.
-----------------------------------
14.1 WARRANTY DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NONE OF
THE PARTIES HERETO MAKES ANY WARRANTIES, WHETHER EXPRESS OR OTHERWISE,
CONCERNING ANY PROPRIETARY RIGHTS, TW TECHNOLOGY, IN TECHNOLOGY, IN PATENTS,
TWIN TECHNOLOGY, TWIN DERIVATIVE WORKS, TRADEMARKS, PRODUCTS, PROCESSES,
DESIGNS, DOCUMENTS OR INFORMATION LICENSED OR OTHERWISE PROVIDED PURSUANT TO
THIS AGREEMENT, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS ALL IMPLIED
WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, AND WARRANTIES OF FREEDOM FROM ERRORS OR
DEFECTS.
14.2 NO CONSEQUENTIAL DAMAGES. NONE OF THE PARTIES HERETO SHALL BE
RESPONSIBLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, HOWEVER
CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES ARISING IN ANY WAY OUT OF THIS
AGREEMENT OR ANY PROPRIETARY RIGHTS, TW TECHNOLOGY, IN TECHNOLOGY, IN PATENTS,
TWIN TECHNOLOGY, TWIN DERIVATIVE WORKS, TRADEMARKS, PRODUCTS, PROCESSES,
DESIGNS, DOCUMENTS OR INFORMATION LICENSED OR OTHERWISE PROVIDED PURSUANT TO
THIS AGREEMENT.
14.3 LIMITATION ON LIABILITY. IN NO EVENT WILL ANY PARTY'S LIABILITY
ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED THE AMOUNT OF FIVE MILLION
U.S. DOLLARS (US$5,000,000), EXCEPT FOR LIABILITY (EXCLUDING LIABILITY FOR
PATENT INFRINGEMENT CLAIMS) ARISING OUT OF OR RELATED TO SECTION 12.1 (i)
(SOLELY WITH RESPECT TO CLAIMS BASED ON A BREACH OF SECTION 13.1(v) AND/OR (vi))
OR SECTION 12.1 (ii) WHICH SHALL IN NO EVENT EXCEED THE AMOUNT OF TEN MILLION
U.S. DOLLARS (US$10,000,000). Each Party acknowledges that its willingness to
grant such rights as it grants to any the other Party hereunder is expressly
conditioned on its ability to disclaim and exclude such warranties and to limit
its liabilities as set forth above.
15. TERM AND TERMINATION.
--------------------
15.1 TERM. This Agreement shall become effective as of the Effective
Date and continue in effect, unless and until terminated in accordance with the
provisions hereof.
15.2 TERMINATION OF LICENSES ON MATERIAL BREACH BY TWIN. Either
Licensor may terminate its licenses granted to TWIN hereunder, upon written
notice to the other Parties, if TWIN materially breaches Section 2.1 ("TW
License") (only in the case of TW), 2.2 ("IN License") (only in the case of IN),
3 ("Trademark License") (only in the case of TW), 5 ("Licenses from TWIN"), 8.2
("Support Fees"), 8.5 ("Direct Expense Reimbursement") or 11 ("Confidentiality")
of this Agreement and (i) fails to cure such breach within thirty (30) days of
written notice to the other Parties describing the breach in reasonable detail,
26
or (ii) fails to make reasonably diligent efforts to begin to cure any such
breach if a cure cannot be accomplished within thirty (30) days. Such affected
Licensor may terminate its licenses and rights granted to TWIN immediately upon
written notice to the other Parties, if such material breach is not capable of
cure. If either Licensor terminates its license grants under this Section 15.2,
(x) the Agreement shall be deemed terminated with respect to such Licensor and
all rights and obligations of such Licensor hereunder shall be terminated
simultaneously (except as provided in Section 15.6) and (y) the other Licensor
shall also have the right to terminate its licenses and rights granted to TWIN
effective upon delivery of written notice thereof to the other Parties within
sixty (60) days of the affected Licensor's notice of termination, and the effect
of such other Licensor's termination of its licenses shall be as set forth in
the immediately preceding subsection (x).
15.3 TERMINATION ON MATERIAL BREACH OF A LICENSOR. If either Licensor
("Defaulting Licensor") materially breaches any material provision of this
Agreement (excluding Section 13.2(v)) and (i) fails to cure such breach within
thirty (30) days of written notice describing the breach in reasonable detail
("Default Notice"), or (ii) fails to make reasonably diligent efforts to begin
to cure any such breach if a cure cannot be accomplished within thirty (30) days
and to cure such breach within ninety (90) days of the Default Notice, then
(a) TWIN shall have the right to: (i) commence the dispute
resolution procedures set forth in Section 16.5 ("Arbitration") and/or seek
remedies under Section 11.6 ("Injunctive Relief"), as applicable; and/or (ii)
terminate the Defaulting Licensor's licenses by delivering written notice
thereof to the Licensors; and/or (iii) purchase (or permit its designee to
purchase) the Defaulting Licensor's equity interest in TWIN at its fair market
value (taking into consideration the effect of the breach) less a discount of
twenty-five percent (25%) by delivering written notice to the other Parties of
such election within thirty (30) days of such failure to cure and otherwise in
accordance with the procedures and provisions of Section 2.5 (but for such
purposes TWIN shall be deemed to be the purchasing stockholder) of the
Stockholders Agreement; and
(b) The other non-defaulting Licensor shall have the right to:
(i) if TWIN elected to terminate the Defaulting Licensor's licenses pursuant to
Section 15.3 (a)(ii), convert its own licenses from exclusive to non-exclusive;
and/or (ii) if TWIN did not elect to purchase the Defaulting Licensor's equity
interest pursuant to Section 15.3 (a)(iii), purchase (or permit its designee to
purchase) the Defaulting Licensor's equity interest in TWIN at its fair market
value (taking into consideration the effect of the breach) less a discount of
twenty-five percent (25%) by delivering written notice to the other Parties of
such election within thirty (30) days of such failure to cure and otherwise in
accordance with the procedures and provisions of Section 2.5 (a) of the
Stockholders Agreement.
15.4 TERMINATION OF LICENSES ON CESSATION OF TWIN BUSINESS OPERATIONS.
Upon any of the following events:
(a) the filing by TWIN of a petition in bankruptcy;
(b) any adjudication that TWIN is bankrupt or insolvent;
27
(c) the filing by TWIN of any legal action or document seeking
reorganization, readjustment or arrangement of TWIN's business under any law
relating to bankruptcy or insolvency;
(d) the appointment of a receiver or bankruptcy trustee for
all or substantially all of the property of TWIN;
(e) the making by TWIN of any general assignment for the
benefit of creditors;
(f) the institution of any proceedings for the liquidation or
winding up of TWIN's business or for the termination of its corporate charter,
provided, in the event such proceedings are involuntary, the proceedings are not
dismissed within ninety (90) days;
(g) the cessation of normal business operations of TWIN, all
licenses from Licensors to TWIN hereunder shall immediately and automatically
terminate and Licensors shall be immediately released from their non-compete
obligations (if any remain) set forth in Section 7.1 ("Non-compete
Obligations").
15.5 TERMINATION OF LICENSES ON CESSATION OF LICENSOR BUSINESS
OPERATIONS. Upon any of the following events:
(a) the institution of any proceedings for the liquidation or
winding up of a Licensor's business or for the termination of its corporate
charter, provided, in the event such proceedings are involuntary, the
proceedings are not dismissed within ninety (90) days; or
(b) the cessation of normal business operations of a Licensor,
TWIN shall have the right, at its sole discretion and option, to purchase the
defaulting Licensor's equity interest in TWIN at its fair market value, in
accordance with the procedures and provisions of Section 2.5 (but for such
purposes TWIN shall be deemed to be the purchasing stockholder) of the
Stockholders Agreement. If TWIN does not provide notice to the other Parties of
its election to so purchase such equity interest within thirty (30) days of the
occurrence of the applicable event described in the immediately preceding
subsections (a) and (b), then the non-defaulting Licensor shall have the right,
at its sole discretion and option, to purchase the defaulting Licensor's equity
interest in TWIN at its fair market value, in accordance with the procedures and
provisions of Section 2.5 of the Stockholders Agreement.
15.6 EFFECT OF TERMINATION.
(a) Except as otherwise provided in this Section 15.6, all
rights and obligations of the Parties hereunder shall cease upon termination of
this Agreement. The definitions and the following sections and subsections shall
survive any termination of this Agreement on the dissolution of TWIN or
termination of any license granted hereunder automatically or by any Party:
Sections 8.2 ("Support Fees") (to the extent any amounts are owed to TW
hereunder), 8.7 ("Audit") (for three (3) years following termination), 10
("Intellectual Property Rights"), 11 ("Confidentiality"), 12.1 ("TW
Obligation"), 12.2 ("IN Obligation"), 12.3 ("Condition to Obligations"),
subsections (v), (vi), (viii) and (ix) of 13.1 ("Representations and Warranties
of TW"), subsections (v) and (vi) of 13.2 ("Representations and Warranties of
IN"), 13.4 ("No Warranty of Validity"), 13.5 ("Sole Remedy"), 14 ("Disclaimer;
Limitation of Liability"), 15 ("Term and Termination"), and 16
("Miscellaneous").
28
(b) Upon termination of this Agreement due to the dissolution,
liquidation, winding up, or other event described in Section 15.4, (i) all
licenses granted pursuant to this Agreement prior to its termination shall
terminate, provided that with respect to any outstanding sublicenses, the
Licensors shall cooperate and negotiate in good faith in an equitable manner to
allocate between them by transfer or assignment the sublicenses and any income
or revenues arising therefrom, (ii) all rights and licenses assigned to TWIN
pursuant to Section 7.2(a) ("Assignment of NTN Licenses"), if any, shall
immediately and automatically revert to IN and TWIN shall cooperate fully with
IN in transitioning such rights, licenses and associated matters and materials
back to IN, (iii) the Parties shall cooperate and negotiate in good faith in an
equitable manner to allocate between them the TWIN Technology, TWIN Derivative
Works, and TWIN Proprietary Rights, (iv) if applicable, TWIN shall cooperate
with each Licensor in transitioning back to such Licensor the responsibility to
police, protect and enforce such Licensor's Proprietary Rights in the Territory,
and (v) each Party shall return or destroy all Confidential Information of the
other Parties in its possession or control, including all copies thereof,
whether tangible or in electronic form or otherwise.
16. MISCELLANEOUS.
-------------
16.1 FORCE MAJEURE. No Party shall be liable for failure to perform, in
whole or in material part, its obligations under this Agreement if such failure
caused by any event or condition not existing as of the date of this Agreement
and not reasonably within the control of the affected Party, including, without
limitation, by fire, flood, typhoon, earthquake, explosion, strikes, labor
troubles or other industrial disturbances, unavoidable accidents, war (declared
or undeclared), acts of terrorism, sabotage, embargoes, blockage, acts of
Governmental Authorities, riots, insurrections, or any other cause beyond the
control of the Parties; provided that the affected Party promptly notifies the
other Parties of the occurrence of the event of force majeure and takes all
reasonable steps necessary to resume performance of its obligations so
interfered with.
16.2 ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations created hereunder may be assigned, transferred, pledged, or
otherwise encumbered or disposed of, in whole or in part, whether voluntarily or
by operation of law, or otherwise, by any Party without the prior written
consent of the other Parties. This Agreement shall inure to the benefit of and
be binding upon the Parties' permitted successors and assigns.
16.3 NOTICES. All notices and communications required, permitted or
made hereunder or in connection herewith shall be in writing and shall be mailed
by first class, registered or certified mail (and if overseas, by airmail),
postage prepaid, or otherwise delivered by hand or by messenger, or by
recognized courier service (with written receipt confirming delivery),
addressed:
(a) If to IN, to: Interactive Network, Inc.
1161 Old County Road
Belmont, California 94002
with a copy to: Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105-2482,
U.S.A.
Attn: Robert Townsend
29
(b) If to TW, to: Two Way TV Ltd.
Beaumont House
Kensington Village
Avonmore Road
London, England W148TS
with a copy to: Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, California 94111-3143,
U.S.A.
Attn: Greg Bibbes
(c) If to TWIN: TWIN Entertainment Inc.
50 Francisco Street, Suite 490
San Francisco, CA 94111, U.S.A.
with a copy to: Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105-2482,
U.S.A.
Attn: Robert Townsend
Each such notice or other communication shall for all purposes
hereunder be treated as effective or as having been given as follows: (i) if
delivered in person, when delivered; (ii) if sent by mail or airmail, at the
earlier of its receipt or at 5 p.m., local time of the recipient, on the seventh
day after deposit in a regularly maintained receptacle for the deposition of
mail or airmail, as the case may be; and (iii) if sent by recognized courier
service, on the date shown in the written confirmation of delivery issued by
such delivery service. Any Party may change the address and/or addressee(s) to
whom notice must be given by giving appropriate written notice at least seven
(7) days prior to the date the change becomes effective.
16.4 EXPORT CONTROL. Without in any way limiting the provisions of this
Agreement, each of the Parties hereto agrees that no products, items,
commodities or technical data or information obtained from a Party hereto nor
any direct product of such technical data or information is intended to or shall
be exported or reexported, directly or indirectly, to any destination restricted
or prohibited by Applicable Law without necessary authorization by the
Governmental Authorities, including (without limitation) the United States
Bureau of Export Administration (the "BEA") or other Governmental Authorities of
the United States, Canada or England with jurisdiction with respect to export
matters.
16.5 ARBITRATION.
(a) Except as set forth below, any disputes arising among the
Parties or between any two Parties in connection with this Agreement shall be
settled by the affected Parties amicably through good faith discussions upon the
written request of any Party. In the event that any such dispute cannot be
resolved through such discussions within a period of sixty (60) days after
delivery of such notice, the dispute shall be finally resolved exclusively by
confidential arbitration pursuant to the rules of the American Arbitration
Association in San Francisco, California, U.S.A., or such other location agreed
between or among the disputing Parties; provided, however, that the arbitrators
shall be empowered to hold hearings at other locations within or without the
United States. The appointing authority shall nominate all three arbitrators.
30
Any Party shall have the right (but not the obligation) to join an already
constituted arbitration proceeding subject to such Party's agreement concerning
the members of the already constituted panel of arbitrators. The arbitrators
shall not have the power to impose any obligation on any of the Parties, or take
any other action, which could not be imposed or taken by a federal or state
court sitting in the State of California. The judgment upon award of the
arbitrators shall be final and binding and may be enforced in any court of
competent jurisdiction in the United States or England and Wales, and each of
the Parties hereto unconditionally submits to the jurisdiction of such court for
the purpose of any proceeding seeking such enforcement. The fees and expenses of
the arbitrators shall be paid by the Parties to the dispute in equal shares,
unless the arbitrators determine that the conduct of any Party (with regard to
the subject matter of the dispute and/or the arbitration proceedings) warrants
divergence from this rule, in which event an appropriate costs order may be
made. Subject only to the provision of Applicable Law and Section 11.6 ("Right
to Special Relief"), the procedure described in this Section 16.5 shall be the
exclusive means of resolving disputes involving TW and arising under this
Agreement.
(b) CONFIDENTIAL RESOLUTION. All papers, documents or
evidence, whether written or oral, filed with or presented to the panel of
arbitrators shall be deemed by the Parties and by the arbitrators to be
Confidential Information. No Party or arbitrator shall disclose in whole or in
part to any other person any Confidential Information submitted in connection
with the arbitration proceedings, except to the extent reasonably necessary to
assist counsel in the arbitration or preparation for arbitration of the dispute.
Confidential Information may be disclosed (i) to attorneys, (ii) to Parties, and
(iii) to outside experts requested by any Party's counsel to furnish technical
or expert services or to give testimony at the arbitration proceedings, subject,
in the case of such experts, to execution of a legally binding written statement
that such expert is fully familiar with the terms of this section, that such
expert agrees to comply with the confidentiality terms of this section, and that
such expert will not use any Confidential Information disclosed to such expert
for personal or business advantage.
16.6 ENTIRE AGREEMENT. This Agreement and the Associated Agreements,
and the attachments and exhibits hereto and thereto, embody the entire agreement
and understanding between and among the Parties with respect to the subject
matter hereof, superseding all previous and contemporaneous communications,
representations, agreements and understandings, whether written or oral,
including without limitation that certain Heads of Terms between IN and TW to
Form a Joint Venture. No Party has relied upon any representation or warranty of
any other Party except as expressly set forth herein and in the Associated
Agreements.
16.7 MODIFICATION. This Agreement may not be modified or amended, in
whole or part, except by a writing executed by duly authorized representatives
of all Parties.
16.8 ANNOUNCEMENT. The Parties may announce the existence of the
Parties' relationship and this Agreement only at a time and in a form to be
mutually determined, except for any such disclosure required by law,
governmental authorities or stock exchanges. No Party shall unreasonably
withhold its consent to a time proposed by any other Party.
16.9 SEVERABILITY. If any term or provision of this Agreement shall be
determined to be invalid or unenforceable under Applicable Law, such provision
shall be deemed severed from this Agreement, and a reasonable valid provision to
be mutually agreed upon shall be substituted. In the event that no reasonable
31
valid provision can be so substituted, the remaining provisions of this
Agreement shall remain in full force and effect, and shall be construed and
interpreted in a manner that corresponds as far as possible with the intentions
of the Parties as expressed in this Agreement.
16.10 NO WAIVER. Except to the extent that a Party hereto may have
otherwise agreed in writing, no waiver by that Party of any condition of this
Agreement or breach by any other Party of any of its obligations or
representations hereunder shall be deemed to be a waiver of any other condition
or subsequent or prior breach of the same or any other obligation or
representation by any other Party, nor shall any forbearance by the first Party
to seek a remedy for any noncompliance or breach by any other Party be deemed to
be a waiver by the first Party of its rights and remedies with respect to such
noncompliance or breach.
16.11 NATURE OF RIGHTS. Each Party shall have the rights licensed under
this Agreement to any other Party's technology and the related Proprietary
Rights when created, developed or invented regardless of whether physically
delivered to such Party. All rights and licenses granted under or pursuant to
this Agreement by a Party to another Party are, for purposes of Section 365(n)
of the U.S. Bankruptcy Code (the "Bankruptcy Code"), licenses of "Intellectual
property" within the scope of Section 101 of the Bankruptcy Code.
16.12 GOVERNING LAW. The validity, construction, performance and
enforceability of this Agreement shall be governed in all respects by the laws
of the State of California, U.S.A., without regard to its conflicts of laws
principles. The Parties exclude the application of the United Nations Convention
on Contracts for the International Sale of Goods.
16.13 NO AGENCY OR PARTNERSHIP. This Agreement shall not constitute an
appointment of any Party as the legal representative or agent of any other
Party, nor shall any Party have any fight or authority to assume, create or
incur in any manner any obligation or other liability of any kind, express or
implied, against, in the name or on behalf of, any other Party. Nothing herein
or in the transactions contemplated by this Agreement shall be construed as, or
deemed to be, the formation of a partnership, association, joint venture, or
similar entity by or among the Parties hereto.
16.14 HEADING. The section and other headings contained in this
Agreement are for convenience of reference only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
16.15 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which shall be deemed to
constitute one and the same instrument.
16.16 NO THIRD PARTY BENEFICIARIES. The Parties intend and agree that
no other Person, entity or other party shall be considered a third-party
beneficiary of this Agreement. Nothing contained in this Agreement shall be
construed to create rights for any third party beneficiary.
32
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed in triplicate by their duly authorized representatives on the date set
forth above.
INTERACTIVE NETWORK, INC. TWO WAY TV LTD.
---------------------------------------------- -----------------------------
By: Bruce W. Bauer By: Piers Wilson
Title: President and Chief Executive Officer Title: Finance Director
TWIN ENTERTAINMENT INC.
----------------------------------------------
By: Bruce W. Bauer
Title: President
----------------------------------------------
By: Piers Wilson
Title: Secretary and Treasurer
33
EXHIBIT A
DESCRIPTION OF THE IN PATENTS
-----------------------------
UNITED STATES
-------------
Patent No. Filed Granted Application Number
------------------------------- ----------------------------- ---------------------------- -------------------------
US4592546 Apr 26, 1984 June 3, 1986 US1984000604145
Game of skill playable by remote participants in conjunction with a live event
US5013038 Dec 8, 1989 May 7, 1991 US1989000448001
Method of evaluating data relating to a common subject
US5083800 June 7, 1990 Jan 28, 1992 US1990000535309 Game of skill or
chance playable by several participants remote from each other in conjunction
with a common event
US5120076 Apr 25, 1991 June 9, 1992 US1991000692816
Method of evaluating data relating to a common subject
US5643088 May 31, 1995 July 1, 1997 US1995000454925 Game of skill or
chance playable by remote participants in conjunction with a common game event
including inserted interactive advertising
US5813913 May 30, 1995 Sep 29, 1998 US1995000453403 Game of skill
playable by remote participants in conjunction with a common game event where
participants are grouped as to skill level
CANADA
------
Patent No. Filed Granted Application Number
------------------------------- ----------------------------- ---------------------------- -------------------------
507982 Apr 30, 1986 Oct 2, 1990 1274903
Game of skill playable by remote participants in conjunction with a live event
June 8, 1990 Pending 2018597
Game of skill or chance playable by several participants remote from each other
in conjunction with a common event
A-1
EXHIBIT B
TWIN BUSINESS
-------------
"TWIN Business" shall mean developing, marketing, supplying, operating
and licensing certain digital (and analog) interactive and other related
services, products and technology in the Territory.
B-1
EXHIBIT C
PERFORMANCE CRITERIA
--------------------
The performance criteria ("Performance Criteria") are as follows:
1. Execution of a definitive agreement with a Multiple System Operator
("MSO") or distributor having in excess of 1 million subscribers by September 1,
2000, whereby such MSO or distributor will offer TWIN interactive television
service(s) to a minimum of 1 million of such MSO/Distributor's subscribers.
2. Execution of definitive agreement(s) whereby TWIN will receive
funding (whether in the form of equity investment, loan or other cash provided
by an unrelated third party) of at least US$10 million by January 1, 2001
3. Commercial launch by TWIN of an interactive service by April 1, 2001
C-1
EXHIBIT D
DESCRIPTION OF CURRENT TW TECHNOLOGY
------------------------------------
This description of Current TW Technology is for descriptive purposes
only. TW makes no representations or warranties with respect to TW Technology
other than as specifically set forth in Section 13 of this Agreement.
INTRODUCTION
The Two Way TV System allows the delivery of a platform and network
independent interactive entertainment service. The service is initially targeted
at Set-Top Boxes (STBs) in customer's homes, but is equally applicable in many
other environments.
The system described in this document is the second iteration of the
Two Way TV System. The first version was used to support a substantial field
trial with several thousand customers over a period of three years.
The `Two Way TV Service' is the entire package provided by Two Way TV.
The `Two Way TV System' is the technology components provided by Two Way TV that
allow the service to be operated
The Two Way TV service is based on extensible technology that is
capable of delivering simultaneous service across multiple networks.
The system is divided into distinct layers, as illustrated below:
------------------------------ <----------------
Control and Management Tools Two Way TV |
------------------------------ System |
Two Way TV CCS Components |
------------------------------ <----------------
| /\
| |
\/ |
------------------------------ <----------------
Broadcast Return Path Service |
Infrastructure Infrastructure Provider |
------------------------------ <----------------
| /\
| |
\/ |
------------------------------ <----------------
Two Way TV Engine Two Way TV |
------------------------------ System |
Two Way TV Applications Components |
------------------------------ <----------------
The Two Way TV system includes components either side of the service
provider's infrastructure. The different layers within the system are used to
provide as much abstraction as possible to ensure that introduction of support
for new platforms can be achieved as quickly as possible.
The abstraction layers allow all internal components within the CCS
system that manage the delivery of data and return path data processing to
operate on a known data also ensure that new platforms can leverage the
functionality available to existing platforms.
D-1
The diagram below expands on the initial layers, providing more detail
in each. Each of the separate modular components illustrated below are discussed
later in this document.
---------------------------------------------------------------------------------------------------------------------
LIPS
Mission CCT Tool Authoring --------------------------------------- Return Path Game SMS
Control Tools Football Formula 1 Cricket Universal Processing Engines
---------------------------- Live Tool
Tennis Horse Racing Rugby
---------------------------------------------------------------------------------------------------------------------
|
CCS Text
CENTRAL SYSTEMS Message
Gateway
|
-------------------------------------------------------------------------------------------------------
CCS
-------------------------------------------------------------------------------------------------------
Broadcast Broadcast Broadcast Broadcast Broadcast Broadcast
System Interface System Interface System Interface System Interface System Interface System Interface
-------------------------------------------------------------------------------------------------------
| | | | | |
BROADCAST NCI DTV Open TV MHEG-5 WebTV/WinCE PowerTV ????????
NETWORK Navigator
| | | | | |
-------------------------------------------------------------------------------------------------------
Two Way TV Two Way TV Two Way TV Two Way TV Two Way TV Two Way TV
Engine Engine Engine Engine Engine Engine
STB -------------------------------------------------------------------------------------------------------
Application Application Application Application Application Application
-------------------------------------------------------------------------------------------------------
As can be seen from the diagram, the system is divided into three main
areas, Central Systems, the Broadcast Network, and the STB (or client). The
Central Systems and STB areas are provided by the Two Way TV system. In the
majority of deployments the Broadcast Network will be the responsibility of the
service provider.
The main components of both the CCS and the engine in the STB (or
client) are described in the following sections.
CENTRAL COMPUTER SYSTEM (C.C.S.)
--------------------------------
The Two Way TV Central Systems (CCS) deliver the Two Way TV service to
the supported infrastructures. The software is developed and deployed on Sun
Solaris UltraSPARC(TM) workstations.
The CCS system is a collection of collaborating services that combine
to provide the Two Way TV functionality required in a given installation. This
results in a system that can be tailored to specific requirements and commercial
arrangements.
STANDARD SERVICE SET
--------------------
The following services are the key services included in a standard CCS
system. All services can be enabled or disable for a given CCS configuration,
although is does not make sense to disable certain services, such as messaging!
Services can be easily added to the CCS system. Currently, development versions
of the system support far more services than are presented here.
D-2
CCS CORE
--------
This service is responsible for bringing up the system and subsequent
monitoring of other active services. This also provides the functionality to
start and stop services at run-time.
MESSAGING SERVICE
-----------------
This service provides the messaging functionality used by the CCS to
communicate with all external clients (Two Way TV Tools, return path data etc.).
SCHEDULE SERVICE
----------------
This provides a central scheduling facility within the CCS. This can be
used to schedule CCS events, and control messages can be scheduled to automate
CCS operation.
STORAGE SERVICE(S)
------------------
These provide all of the permanent storage facilities required by the
CCS.
BROADCAST SERVICE
-----------------
Provides all data broadcast functionality within the CCS. This service
includes the broadcast system interfaces for all supported platforms. This is
not defined as a core service as the CCS system may not be used for broadcast
applications in certain configurations.
BROADCAST GAME SERVICE
----------------------
Provides Enhanced TV and Games Lounge style functionality. The service
handles application broadcast, real-time data transmission, game synching,
real-time management and control of the game and all other aspects of broadcast
game play.
RETURN PATH SERVICE
-------------------
This service provides standard return path processing, vote processing,
score processing and an active scoring algorithm using the Two Way TV patented
score gathering technique.
CHAT SERVICE
------------
This service provides a chat engine that can be accessed using the CCS
messaging system. This allows applications/games to access chat functionality,
as well as stand-alone chat applications to be built.
BROADCAST SYSTEM INTERFACES
---------------------------
The CCS system produces data for broadcast in an abstract form. It is
the job of the broadcast system interface to convert this data into an
appropriate form for the target platform.
This may involve, for example, using different methods of data
transmission for different types of components, using a broadcast carousel for
application components such as executable code, bitmaps fonts etc., and using a
separate out-of-band communications channel for the applications real-time data.
Additionally the broadcast system interface may convert, manipulate, or process
the application components and/or real-time data.
D-3
The CCS itself provides a messaging API for external clients. The same
API is used internally by CCS components such as return path handling and
application control services. Not only does this allow application developers to
define the data transmitted to their application but also allows them to define
the format of return path data and the processing that takes place on that data.
SCALABILITY AND ROBUSTNESS
--------------------------
The growth of the Two Way TV service will impact the performance
requirements of the CCS system. This is a factor of how many different services
are offered, the number of different infrastructures being supported, and the
number of subscribers. The number of services and infrastructures being
supported affects the transmission section of the CCS and the number of
subscribers increasing affects the return path sub-systems. The impact of
increased subscribers will only be substantial if applications requiring
feedback from all subscribers are used.
The architecture of the system allows new infrastructures to be
supported easy and with no disruption to the rest of the system. This allows for
rapid implementation and test times.
The CCS has been designed from the ground up to be a multi-threaded
distributed system. Entire sub-systems can be hosted on different systems if
necessary with very little effort. The multi-threaded nature of the system also
means significant performance improvements can be achieved by simply adding
processors to the hosting workstation.
Given the broadcast nature of the Two Way TV system it is critical that
the central systems are robust. This can be measured in a number of ways. The
system must itself have integrity to ensure that operation is uninterrupted
during operational periods. In addition to this features must be provided to
ensure that known failure modes can be handled. Operating system crashes, both
Sun and Windows NT will affect the operation of the system. Currently a crash of
the operating system hosting the control tools would have no effect on the
operation of the system.
Protection is built into the CCS program itself to provide best efforts
to handle a rogue sub-system by detecting abnormal behaviour and shutting down
the sub-system responsible.
CCS TOOLSET
-----------
The CCS comes complete with a set of Windows NT(TM) based tools. These
provide an easy to use front-end interface to the Two Way TV CCS system:
MISSION CONTROL
---------------
This is the main CCS control tool. It allows initiation and the
subsequent management of Two Way TV applications. The tool clearly displays the
state of running applications, and allows the user to adjust the timing of the
application. The application can also be paused, terminated early, and the like.
D-4
CCT TOOL
--------
This is the primary real-time content creation tool. It allows custom
templates to be created for each Two Way TV application.
AUTHORING TOOLS
---------------
Two Way TV have developed application authoring tools for each
supported target platform. These provide a more productive and time-efficient
route to authoring than the standard facilities provided with the target
platforms.
LIPS TOOLS
----------
These are a set of Windows NTTM based applications which are used to
support real-time applications. These tools are usually application specific and
are geared towards a live broadcast environment where operators require a simple
to use interface reducing the risk of transmission errors. Typically a live tool
will include a database of possible live data and the operator will simply
select the correct data to send at the appropriate time.
In addition to these a universal tool is provided that provide generic
live application support which is useful for initial prototypes.
TWO WAY TV ENGINE
-----------------
Many set top box execution environments do not provide the
functionality necessary to support Two Way TV applications. These applications
require very specific yet simple functionality. As a minimum, Two Way TV
applications require:
o Reliable, Live broadcast message protocols
o Video/Time Synchronisation (including an accurate set top
clock)
o Fairness
o Security
o Efficient Return Path Use
Some of the above requirements are met by systems compliant with the
ATVEF specification for enhanced TV content. Underlying standards such as DVB or
ATSC provide access to the underlying networks.
On platforms where one or more of these do not exist, the Two Way TV
Engine may provide them.
The Two Way TV Engine can be used in both one-way broadcast and two way
video systems, and is designed to be compatible with all international standards
for both analog and digital video systems.
D-5
OVERVIEW
--------
The Two Way TV Engine is a native code plug-in, which provides access
to Two Way TV services delivered on the underlying network. In the context of
the Engine, native code may mean low level set top specific code or high-level
application code; implementation depends on platform capability.
The Engine can also provide access to commonly used services and
building blocks utilised by Two Way TV applications and interactive services.
The objective of the Engine is to provide a common set of capabilities
to application developers, which hide the native implementations of message
queues and underlying network protocols. It does not inhibit access to desirable
features found on some platforms and networks. It is important that application
developers may make use of technologies provided by a set top box without
becoming bogged down with implementation issues.
It is important that the handling of Two Way TV service specific
messages, particularly real time messages is carried out as efficiently as
possible. By providing a core Engine to handle this, it removes the
responsibility from the application developer and ensures a reliable fast and
efficient core on which to base applications. Furthermore, changes to the
underlying protocols do not warrant code changes or recompiling of Two Way TV
applications.
The handling of Two Way TV service specific messages within a well
defined core Engine allows the use of a common messaging protocol across
different platforms. This enables one head end Central Computer System (CCS) to
drive services across multiple platforms and networks.
ENGINE REFERENCE ARCHITECTURE
-----------------------------
The Two Way TV Engine Reference Architecture is a high level view of a
generic set top box environment. The architecture demonstrates the physical
implementation of the Two Way TV Engine in relation to other set top box
software components and existing digital TV standards.
D-6
Two Way TV -- > Two Way TV Applications
Engine < -- Play Live Sports, Quiz Games etc.
Live Message Handling, |
Return Path |
Management, ATVEF |
Synchronisation, HTML, CSS, ECMAScript, DOM, |
Generic API Support Triggers, Transport Stream Bindings |
|
Application Execution Environment
[illegible]
--------------------------------------------------------------------------------
Real Time Operating System
Device Drivers, Network Access, Thread Control etc.
--------------------------------------------------------------------------------
| |
Digital Broadcast Streams Return Path Network
DVB, ATSC etc. PSTN, DOCSIS etc.
--------------------------------------------------------------------------------
In the Reference Architecture, the Two Way TV Engine bridges the gap
between the functionality specified by existing environments (such as OpenTV,
PowerTV, ATVEF) and the functionality required for Two Way TV.
ATVEF BASED ENGINE
------------------
The Reference Architecture may be based on an ATVEF compliant receiver.
The ATVEF specification for enhanced television programming uses existing
Internet technologies. It delivers enhanced TV programming over both analog and
digital video systems using terrestrial, cable, satellite and Internet networks.
o ATVEF mandates support for the following standard
specifications:
o HTML 4.0 (Frameset Document Type Definition)
o CSS 1
o ECMAScript
o DOM 0
With the inclusion of ATVEF Triggers (All forms of ATVEF transport
involve data delivery and triggers), most of the Two Way TV Engine may be coded
as client JavaScript delivered within applications.
D-7
FUNCTIONAL ELEMENTS
-------------------
The functional elements of the Two Way TV Engine may be broken down
into the following components:
o High Level Engine API
o Live message Handling
o Two Way TV Live Message Protocol
o Timing and Synchronisation
o Return Path Management
o Low Level Abstraction Layer
These core components of the Engine offer a common API to the
application developer. This API may be in the form of direct function calls or
through an event model, depending on target platform.
HIGH LEVEL ENGINE API
---------------------
This module provides a standardised API to the application developer.
Depending on target platform, this API may be direct function calls, an event
model or a combination of the two. In the Reference Architecture, based on an
ATVEF compliant receiver, the API is based on a JavaScript event model.
The primary purpose of this API is to simplify access to the Two Way TV
Engine and the underlying environments API.
LIVE MESSAGE HANDLING
---------------------
This module provides a reliable timed delivery of messages to the
application. The messages are delivered to this module using the Two Way TV Live
Message Protocol. The messages passed to the application by this module are
guaranteed to be in order and on time. Some messages handled by this module may
not be passed all the way to the application, but are used to control behaviour
of the Engine itself.
TWO WAY TV LIVE MESSAGE PROTOCOL
--------------------------------
The Two Way TV Live Message Protocol is a multi-layered specification,
which includes definitions for application, system and transport level
protocols. Only those layers that are not provided by the underlying set top and
network are required. In most cases, a DVB or ATSC broadcast bitstream is used
to carry the Two Way TV data. Two Way TV system and transport layers may be used
in lieu of system provided transports such as ATVEF (type A or type B) or DVB
carousels (DSM-CC).
D-8
Optionally, the Two Way TV Message Protocol also provides a definition
for physical layer transports though this is normally provided by the underlying
network in the form of DVB or ATSC compliant bit streams within the broadcast.
The Two Way TV Message Protocol does not limit what content can be
sent, but rather provides a common set of capabilities so that content
developers can author content once for delivery to multiple platforms.
RETURN PATH HANDLER
-------------------
This module handles the complex issues arising through the use of the
return path feature found on many set top boxes. Network bandwidth and head end
capacity issues make this an important part of the Two Way TV Engine. The Return
Path Handler is controlled by both the Two Way TV application and by messages
from the Head End delivered through the Live Message Handlers.
TIMING AND SYNCHRONISATION
--------------------------
This module controls the execution of Two Way TV applications and
services relative to a common clock. Timing and synchronisation of applications
is controlled by messages broadcast from the Head End by the Central Computer
System (CCS).
LOW LEVEL ABSTRACTION LAYER
---------------------------
This module is present to allow an element of re-use within the code
which implements the core Engine. The Low Level Abstraction Layer may not
necessarily be present in all implementations. Alongside the abstraction of
Operating System services, its key contribution to the Engine is the provision
of debugging and development support macros and functions.
D-9
----------------------------------------------------------------------------------------------------------------------
TITLE TWO WAY TV REFERENCE COUNTRY APPLICANT
----------------------------------------------------------------------------------------------------------------------
Method and apparatus for sampling remote data sources Active Scoring Algorithm CA Two Way TV Limited
Method and apparatus for transmitting data Handset Multiplexing CA Two Way TV Limited
Interactive predictive game control LIPS CA Two Way TV Limited
Delivering interactive applications Multiple Architectures CA Two Way TV Limited
Broadcasting interactive applications Status Flag CA Two Way TV Limited
Method and apparatus for input of data Time Stamping CA Two Way TV Limited
Interactive communication system Tokens CA Two Way TV Limited
Method and apparatus for transmitting data Variable Priority CA Two Way TV Limited
----------------------------------------------------------------------------------------------------------------------
Method and apparatus for sampling remote data sources Active Scoring Algorithm USA Two Way TV Limited
Game playing system Handset Interface USA Two Way TV Limited
Method and apparatus for transmitting data Handset Multiplexing USA Two Way TV Limited
Interactive predictive game control LIPS USA Two Way TV Limited
Delivering interactive applications Multiple Architectures USA Two Way TV Limited
Status Flag Status Flag USA Two Way TV Limited
Method and apparatus for input of data Time Stamping USA Two Way TV Limited
Interactive communication system Tokens USA Two Way TV Limited
Method and apparatus for transmitting data Variable Priority USA Two Way TV Limited
----------------------------------------------------------------------------------------------------------------------
US and CA pending National Phase patent applications
----------------------------------------------------------------------------------------------------------------------
Interactive television broadcast system Automatic capture of viewing Two Way TV Limited
Interactive applications figures Two Way TV Limited
Interactive applications Delayed program start Two Way TV Limited
Security
----------------------------------------------------------------------------------------------------------------------
Licensed Technology
----------------------------------------------------------------------------------------------------------------------
Input device for inputting positional information Puck (X-Y Sensor) CA David Woodfield
Input device for inputting positional information Puck (X-Y Sensor) USA David Woodfield
Square wave sensor (pending National Phase) Square wave sensor David Woodfield
Method and apparatus for generating a display signal Multichannel Game US & CA David Woodfield
----------------------------------------------------------------------------------------------------------------------
(remaining columns continued below)
----------------------------------------------------------
APPLICATION
APPLICATION NUMBER DATE GRANT DATE GRANT NUMBER
----------------------------------------------------------
2279890 10-Aug-99
2252074 25-Nov-98
2231946 22-Apr-98
2279069 28-Jul-99
Oct-99
2252021 18-Nov-98
2225317 30-Jan-98
2229772 18-Mar-98
----------------------------------------------------------
09/376244 18-Aug-99
08/672591 14-Oct-94 18-May-99 5905523
09/203967 2-Dec-98
09/064118 21-Apr-98
09/366064 2-Aug-99
Oct-99
09/203458 2-Dec-98
09/019892 6-Feb-98
09/039202 13-Mar-98
----------------------------------------------------------
----------------------------------------------------------
99303717.5 12-May-99
98309944.1 4-Dec-98
99303495.5 4-May-99
----------------------------------------------------------
----------------------------------------------------------
2241506 22-Jun-98 17-Aug-99 Awaiting
09/004675 8-Jan-98 Details
PCT/GB98/03731 18-Dec-99
----------------------------------------------------------
Awaiting details
----------------------------------------------------------
D-10
REQUIRED CONSENTS
-----------------
The following are the agreements in effect as of the Effective Date
pursuant to which third parties have licensed certain technology and/or
proprietary rights to TW which are incorporated in the Current TW Technology and
which TW may sublicense to TWIN as part of the TW Technology subject to such
third parties' prior written consent, not to be unreasonably withheld. TW agrees
to make its best efforts to obtain such consents as soon as practicable after
the Effective Date and to promptly thereafter provide a copy of each such
consent.
License Agreement between David Woodfield and TW dated 2 April 1998.
D-11
EXHIBIT E
THIRD-PARTY LICENSES
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The following are the agreements in effect as of the Effective Date
pursuant to which third parties have a license under the IN Patents in the
Territory:
Patent License Agreement between Interactive Games Patent,
Inc. (now Interactive Network, Inc.) and NTN Communications,
Inc. dated as of April 24, 1987, as amended by Amendment to
Patent License Agreement between NTN Communications, Inc. and
Interactive Game Patent, Inc. (now Interactive Network, Inc.)
dated June 1, 1990.
Stock Purchase Agreement among Interactive Network, Inc.,
David B. Lockton and Gannett Co., Inc. dated as of December 2,
1992.
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EXHIBIT F
SUPPORT SERVICES
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INITIAL TRANSITION SERVICES
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TW shall provide sufficient training to TWIN personnel in order to
provide such personnel with the necessary understanding of the Current TW
Technology and future TW Technology to enable TWIN to exploit the Current TW
Technology and future TW Technology as contemplated by the Agreement and TWIN's
initial business plan.
The training shall be provided at the facilities of either TW or TWIN
and at the times as are mutually agreed upon by TW and TWIN. The parties expect
that such initial training services (the "Initial Transition") shall continue
for a period of six (6) months from the Effective Date, or six (6) months from
the time that TWIN has retained appropriately skilled personnel (as reasonably
determined by TWIN) to receive the training, whichever occurs last. It is
understood that there may be need for additional training of new personnel or
updating of training other than that required in connection with the delivery of
new technology, upgrades, enhancements, or modifications. If such need occurs
and TWIN seeks to receive such additional training from TW, TWIN may deliver
said personnel to the TW training facility and receive that training at no added
costs to TWIN other than as set forth in the next sentence. In the case of such
additional training (i.e. that not included in the delivery of new technology,
upgrades, enhancements, or modifications), all expenses incurred by TWIN are the
obligation of TWIN. If TWIN prefers to have TW deliver the training on-site as
designated by TWIN, then all costs, including those reasonable out-of-pocket
costs (but not salaries, allocated overhead, fees for personnel's time, and like
costs) incurred by TW to meet that obligation are to be paid for by TWIN.
During the course of the Initial Transition it is acknowledged that
TWIN shall create and maintain an adequate staff so as to operate and manage
TWIN's business and the technology delivered after the Initial Transition. After
the Initial Transition TW will provide on-going Support Services as described
below.
ON-GOING SUPPORT SERVICES
-------------------------
TW shall provide and deliver future TW Technology and associated
Proprietary Rights to TWIN in accordance with Section 4.1 ("TW Delivery") of
this Agreement.
TW shall provide TWIN with on-going technical training and support
services in connection with the TW Technology licensed to TWIN under the
Agreement. Such support shall include, without limitation, maintenance and bug
fixes to TW Technology and appropriate further training of TWIN personnel with
respect to upgraded or improved TW Technology.
TW shall have no obligation to provide support with respect to any TWIN
modifications to TW Source Code except as provided in Section 4.1(b) ("Source
Code") of this Agreement.
TW shall use commercially reasonable efforts to acquire or recruit the
necessary resources and personnel to satisfy TWIN's reasonable requirements for
support.
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After the Initial Transition period TW and TWIN will discuss and agree
in good faith upon and generate in writing appropriate service level agreements
and escalation procedures for on-going support services.
GENERAL
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The Support services shall be provided in consideration of the fees
described in Section 8.2 ("Support Fees") of the Agreement.
Notwithstanding the above, if at any time after the Initial Transition
period any member of TW's senior management team is requested to travel to the
United States at TWIN's direct request, then TWIN shall pay for the reasonable
travel and accommodation costs incurred by TW with respect to such visit. This
will not include, however, situations where the travel is necessary because of
deficiencies in the TW Technology, or as a result of problems in the quality, or
responsiveness, of TW support. In such instance the costs are the obligation of
TW.
In addition, TWIN may request TW to provide staff on secondment to
TWIN. If TW can reasonably meet this request, such staff shall be assigned to
TWIN and TWIN shall reimburse TW for all salary and related direct costs for
such employees or contractors during the period of their secondment unless the
staffing was necessary because of deficiencies in the TW Technology, or the
failure of TW to properly and punctually meet the TW required support role, in
which case the costs are the obligation of TW and TW shall supply whatever
staffing is required to immediately (defined as within a reasonable time based
upon the priority of the deficiency or failure to perform the support role by
TW) correct the problem.
TW shall perform all of its Support services hereunder in a
commercially reasonable manner.
TW and TWIN shall each use their best efforts to cooperate with each
other with respect to the Support services.
Without limiting the general obligations above the table below outlines
the Parties' intended general split of responsibilities between TWIN and TW with
respect to TW Technology:
TW RESPONSIBILITY TWIN RESPONSIBILITY
------------------------------------------------------------ ---------------------------------------------------------
Provision of documentation for current and future Creation and maintenance of a TWIN technology group,
technology comprising appropriately skilled individuals
Provision of new, improved and upgraded technology TWIN to provide its own technical support team, to be
trained by TW
Provision of training to appropriately qualified TWIN staff Produce localization and customizations of games and
technology for the U.S. market
24hr support for emergency or operationally critical issues
Timely support of technology delivered to TWIN and code Documented requests for modifications and improvements
modifications requested by TWIN to TW Technology
F-2
DOCUMENTATION
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TW will deliver documentation for all technology delivered to TWIN.
This documentation shall include, but not be limited to, a description of each
component or module of the products, source code, and a complete set of API's
(Application Programming Interfaces) for each component or module. The API's
will be complete and detailed enough so that a reasonably skilled software
programmer would be able to write a replacement component or module and have it
interface and communicate with all the other necessary parts of the system,
without any undue difficulty.
RESPONSE TIME
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TW will respond immediately (defined as within a reasonable time based
upon the priority of the deficiency or failure to perform the support role by
TW) with support to TWIN if a problem occurs which significantly affects the
performance of services to TWIN's customers or partners, and where TWIN
personnel cannot reasonably solve such problem in a timely manner. TW agrees
that such problems can occur without prior warning, and consequently cannot
expect TWIN to give advance notice thereof. TW will make its best efforts to
solve the problem, even to the extent of sending personnel to the TWIN facility,
if necessary.
If TWIN requests an improvement, extension, or modification to the TW
Technology which is not practical for TWIN to implement, TW agrees to make such
modifications in a timely fashion and at a cost at no more than its standard
rate. The schedule will be worked out in good faith between TW and TWIN and will
be based upon a high priority requirement, if so deemed by TWIN.
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EXHIBIT G
LITIGATION
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INTERACTIVE NETWORK INC. v. NTN COMMUNICATIONS INC. ET AL., Federal
Court of Canada File No. T-1471-92.
LOCKTON v. INTERACTIVE NETWORK, INC., "dismissed without prejudice"
U.S. Bankruptcy Court Northern District of California Case No. 98-34055-DM-11,
Adversary No.99-3301-DM.
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