LICENSE AGREEMENT
AGREEMENT, made as of the 14th day of March, 1997, by and between
ACTV INC. and ACTV HOLDINGS, INC., both Delaware corporations having their
corporate offices at 1270 Avenue of the Americas, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
00000 (collectively, "Licensor") and ACTV ENTERTAINMENT., a New York
corporation, having its corporate offices at 1270 Avenue of the Americas, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000 ("Licensee").
W I T N E S S E T H:
WHEREAS, Licensor is the exclusive owner of certain individualized
television programming technologies (the "Intellectual Property"), which
Intellectual Property includes the Patents listed on Exhibit A hereto (the
"Patents") and proprietary technologies, programming methods, the ACTV
Programming and Coding Language, and other trade secrets and know-how, all
relating to the Intellectual Property described in the Patents, including
applications thereof, regardless of distribution or delivery method;
WHEREAS, Licensor wishes to grant to Licensee and Licensee wishes to
obtain from Licensor an exclusive license in the Territory to use and exploit
the Intellectual Property in the distribution of individualized television
directly to home subscribers in the United States for all entertainment
programming.
NOW, THEREFORE, in consideration of one dollar ($1.00), the
foregoing premises and the mutual covenants herein contained, the parties agree
as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "ACTV Programming" shall mean programming that utilizes
the Intellectual Property, including any Improvements.
(b) "Improvements" shall mean any improvement, refinement,
enhancement or other modification of the Intellectual Party.
(c) "License" shall mean that exclusive license which the
Licensor hereby grants to the Licensee to use and exploit the Intellectual
Property, including Improvements as set forth in Paragraph 6 hereof, subject to
the terms hereof.
(d) Net Sales" shall mean subscriber and advertising revenues
by License and its affiliates and sublicensees, if any, less any license fees
payable to third party programming providers, less trade discounts allowed,
valid credits for claims or allowances,
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refunds, returns and recalls and less taxes and other governmental charges
levied on or measured by sales and included in the billing price.
(e) "Territory" shall mean the United States of America and
its possessions, territories and associated commonwealths (including Puerto
Rico, the Virgin Islands and Guam), including all United States military
installations located therein.
2. Grant of Rights
(a) Subject to the terms and conditions herein contained and
for good and valuable consideration, the receipt of which is hereby
acknowledged, Licensor hereby grants to Licensee, subject to the terms hereof,
an exclusive, perpetual License to use, distribute and sublicense the
Intellectual Party and Improvements throughout the Territory for individualized
television directly to home subscribers through the mass distribution systems of
cable broadband distribution system located in the Territory. Not included are
the applications granted to ACTV, Net, Inc. under the March 13, 1997 License
Agreement from Licensor. Licensor hereby agrees promptly to disclose to Licensee
the Intellectual Property licensed hereby.
(b) All products, including, without limitation, television
programming, which are distributed, sold or utilized in any manner and which
incorporate in any manner all or any part of the Intellectual Property contained
within the Licensee granted hereunder will bear the proper proprietary rights
notice, all as specified in writing by Licensor to Licensee, as shall be
sufficient, in Licensor's judgment, to protect its rights and interest in the
rights granted by Licensor to Licensee pursuant hereto. Licensee further agrees
to give proper notice of trademarks, patents and/or copyright where applicable
in connection with the use by Licensee of any rights thereunder, as may be
specified from time-to-time Licensor.
(c) Licensee agrees that during the term of this Agreement, it
will diligently and actively develop, promote, distribute and market ACTV
Programming in the Territory.
3. Consideration
(a) In consideration for the License granted hereunder,
Licensee shall pay Licensor five (5) percent of all Net Sales (as such term is
defined in the respective sublicense agreement, or if not so defined, then as
defined, herein) by sublicensees of Licensee and five (5) percent of the Net
Sales by Licensee at any time that ACTV, Inc. owns directly or through ACTV
Holdings, Inc. less than 50 % of the outstanding Common Stock of Licensee.
(b) Royalty payments shall be made within thirty (30) days of
the end of each calendar quarterly period for sales invoiced by Licensee during
such calendar quarterly period. Each commission payment shall be accompanied by
a report setting forth in reasonable detail the Net Sales during the calendar
quarter and the calculation of royalties based thereon. Licensor shall have the
right once a year and with reasonable notice to examine the books and
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records of Licensee. Such examination shall take place at Licensee's principal
place of business during normal business hours.
4. Reservation of Rights.
(a) Licensee is only permitted to assign or sublicense the
rights hereunder granted to any third party, provided such party agrees in
writing to abide by the terms and conditions of this Agreement to the extent
applicable to it.
(b) All rights not specifically granted to Licensee hereunder
are reserved to Licensor.
5. Confidentiality. Licensee shall maintain in strict confidence and
shall not at any time whether before or after the termination of this agreement
(a) utilize for any purpose other than as permitted under this License, or
cause, enable, assist or permit anyone else to utilize, any of the Intellectual
Property or Improvements: (b) disclose to anyone any such Intellectual Property,
Improvements and/or related information (the "Confidential Information") which
is not generally available to the public unless, (i) through no act of Licensee
contrary to the obligations imposed hereby, such Confidential Information
becomes known to the public prior to the date of Licensee's disclosure, (ii)
such Confidential Information is approved for public release by Licensor, (iii)
such Confidential Information is rightfully received by Licensee from a third
party without restrictions and without breach of Licensee's obligations
hereunder, (iv) such Confidential Information is independently developed by
Licensee without breach of this Agreement, (v) such Confidential Information is
required to be disclosed by judicial or governmental proceeding subject to a
protective order or (vi) such disclosure is necessary or appropriate to the
exploitation of the License granted hereby and only then after such person or
entity to whom disclosure is to be made executes a confidentiality agreement
acceptable to Licensor. Notwithstanding the foregoing, Licensee may disclose
such Confidential Information to its employees who need to know such information
in order for Licensee to use and exploit the Intellectual Property pursuant to
the terms of this Agreement if it has taken reasonable steps to impose the
aforesaid covenants of confidentiality on said employees and to ensure that said
employees will not violate said covenants, including, but not limited to,
causing said employees to enter into written agreements in which said covenants
of confidentiality are effectively imposed upon them. Licensee will copy
Licensor's Confidential Information only to the extent reasonably necessary to
enable Licensee to exercise its rights under the License. In making any such
copies, Licensee agrees to produce faithfully all notices respecting copyright,
trade secrets, and other proprietary rights. Nothing contained herein shall
prevent Licensee from disclosing in general terms the nature of its relationship
with Licensor.
6. Improvements. Any improvements upon the Intellectual Property
made, conceived, invented or wholly acquired by Licensor during the term of this
Agreement, shall be included hereunder, and Licensee shall have the right to
such improvements (limited, however, by the specific terms hereto) without
payment of any additional royalty. Licensee agrees that if during the term of
this Agreement it should make, conceive, invent or acquire any improvements on
the Intellectual Property, or on any component or portion thereof, it will
grant, and hereby does grant, to Licensor a royalty-free, exclusive, paid up,
perpetual license to use such improvements on a world-wide basis. Each party
agrees to disclose promptly to the other party
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all improvements so made, conceived, invented or acquired during the term of
this Agreement which are based, in whole or in part, on any of the Intellectual
Property or Improvements.
7. Representations. Licensor represents and warrants that: (i) it
has the right and authority to enter into this Agreement; (ii) to the best of
its knowledge, it is the sole owner of licensee of all Intellectual Property and
Improvements licensed hereunder and the use thereof will not violate any law or
infringe upon or to violate any rights of any person, firm or corporation; and
(iii) it is not a party to any other existing agreement which would prevent it
from entering into or performing its obligations under the terms of this
Agreement, (iv) to the best of its knowledge, the Patents have been validly
issued, have not been challenged and no adverse claim has been asserted.
8. Litigation. Licensee shall have the sole responsibility at its
sole cost and expense for protecting the rights granted and to be granted herein
against any third party infringement. Licensee agrees to promptly and diligently
seek to protect all rights granted and to be granted herein from and against any
infringement by third parties.
9. Insurance.
(a) During the term of this Agreement, Licensee will maintain,
at its own expense, in full force and effect, with a responsible insurance
carrier, reasonably acceptable to Licensor, such product liability insurance as
is customary for a business of the type, nature and size of Licensee.
(b) Licensee shall, from time to time upon reasonable request
by the other party, promptly furnish or cause to be furnished to Licensor, a
certificate evidencing the insurance required hereby.
10. Termination.
(a) In the event that Licensee materially defaults or breaches
any provision of this Agreement, Licensor reserves the right to terminate this
Agreement upon written notice to Licensee; provided, however, that if Licensee,
within 30 days of such written notice, cures such default or breach, this
Agreement shall continue in full force and effect as if such default or breach
had not occurred; and provided, further, should Licensee dispute any such
alleged breach of this Agreement and such dispute is either submitted to
arbitration in due course pursuant to Paragraph 20 hereof or being resolved by
the parties hereto, then there shall be no default hereunder during the period
in which the parties are in arbitration or diligently, and in good faith,
attempting to resolve such dispute; provided, that after the parties reach an
agreement or an arbitrator makes its decision, Licensee shall comply therewith
within 15 days thereof.
(b) In the event of any adjudication of bankruptcy which is
not vacated within 30 days, appointment of a receiver by a court of competent
jurisdiction who is not removed within 30 days, assignment for the benefit of
creditors or levy of execution directly involving Licensee, this Agreement shall
thereupon forthwith terminate and no longer be of any further force and effect.
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(c) In the event of termination of this Agreement for any
reason whatsoever:
(i) Licensee shall deliver to Licensor all books, notes,
drawings writings and other documents, in the possession of
Licensee or the Permitted Parties relating to the Intellectual
Property and any Improvements licensed to it under Paragraph
2(a) hereof (except that in connection with any Improvements
made by Licensee it may retain copies of all such items
delivered to Licensor and may continue to use any such
Improvements made by it), together with all copies of any
Confidential Information.
(ii) All rights granted by Licensor to Licensee shall
forthwith revert to Licensor.
(iii) Licensor (in the event this Agreement is
terminated by reason of Licensee's default hereunder) shall
continue to be entitled to use or exploit any exclusive
royalty-free license to new developments of Licensee granted
pursuant to Paragraph 6 hereof.
(d) In the event of termination of this Agreement, Licensee
shall assign to Licensor, at the request of Licensor, all of its right, title
and interest in and to any contracts or agreements relating, directly or
indirectly to the Intellectual Property.
11. Notices. All notices to be given or payments made hereunder
shall be in writing and sent by hand, federal express or by registered or
certified mail, postage prepaid, addressed to the respective parties at the
addresses set forth above. All notices shall be effective upon receipt. Copies
of all notices to Licensor or Licensee shall be sent to Xxxxxxx, Savage,
Kaplowitz, Xxxxxxxxxx & Xxxxxx, LLP, 000 Xxxx 00xx Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, attention: Xxxxxx X. Xxxxxxxxxx, Esq.
12. New York Law. This Agreement and all matters or issues
collateral thereto shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to contacts made and performed
entirely therein.
13. Entire Understanding. This Agreement contains the entire
understanding of the parties hereto relating to the subject matter herein
contained, and supersedes any and all prior agreements or understandings
relating to the subject matter hereof. This Agreement may not be changed except
by a writing signed by the party sought to be charged therewith.
14. No Waiver. No waiver by either party, whether express or
implied, of any provisions of this Agreement or of any breach or default by
either party, shall constitute a continuing waiver or a waiver of any other
provision of this Agreement, and no such waiver by either party shall prevent
such party from enforcing any and all provisions of this Agreement or from
acting upon the same or any subsequent breach or default of the other party. No
waiver of any provision hereunder shall be effective unless it is in writing
signed by the against whom enforcement thereof is sought.
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15. Separability. The provisions set forth in this Agreement shall
be considered to be separable and independent of each other. In the event that
any provision of this Agreement shall be determined in any jurisdiction to be
unenforceable, such determination shall not be deemed to affect the
enforceability of any other remaining provision and the parties agree that any
court making such a determination is hereby requested and empowered to modify
such provision and to substitute for such unenforceable provision such
limitation or provision of maximum scope as the court then deems reasonable and
judicially enforceable and the parties agree that such substitute provision
shall be as enforceable in said jurisdiction as if set forth initially in this
Agreement. Any such substitute provision shall be applicable only in the
jurisdiction in which the original provision was determined to be unenforceable.
16. Relationship of the Parties. Nothing contained herein shall be
construed to place the parties in the relationship of partners or joint
venturers and neither party shall have the power to bind or obligate the other.
17. Survival. Unless otherwise provided, the obligations of the
parties hereto shall survive the termination of the term of this Agreement.
18. Arbitration. All claims, demands, disputes, controversies,
differences or misunderstandings between or among the parties hereto or any
other persons bound hereby arising out of or by virtue of this Agreement, shall
be submitted to and determined by arbitration in the City of New York. If the
parties to a dispute arising out of this Agreement are unable to agree on an
arbitrator within 10 days after any party shall have given written notice to the
other that it desires to submit any issue to arbitration, then the American
Arbitration Association shall be designated by any party to appoint an
arbitrator and to arbitrate the matter under its rules. The award of the
arbitrator shall be made in writing, shall be within the scope of this
Agreement, shall not change any of its terms or conditions, shall be binding and
conclusive on all parties, and shall include a finding for the payment of the
costs of the arbitration proceeding (including reasonable attorneys' fees). It
is further agreed that judgment of a court having jurisdiction may be entered
upon the award of the arbitrator.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
ACTV, INC.
By:
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Xxxxxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
ACTV, HOLDINGS, INC.
By:
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Xxxxxxx X. Xxxxxxx, President
ACTV ENTERTAINMENT, INC.
By:
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Xxxxx Xxxxx, President
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EXHIBIT A
ACTV PATENTS
Title
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1. Interactive Cable Television
2. Dedicated Channel Interactive Cable Television
3. One Way Interactive Multisubscriber Communication System
4. Method For Expanding Interactive ACTV Displayable Choices For A Given
Channel Capacity
5. Method For Providing Targeted Profile Interactive ACTV Displays
6. Interactive Television System For Providing Full Motion Synched Compatible
Audio/Visual Displays
7. Interactive Television System For Providing Full Motion Synched Compatible
Audio/Visual Displays From Transmitted Television Signals
8. Method For Providing An Interactive Full Motion Synched Compatible
Audio/Visual Television Display
9. Closed Circuit Television System Having Seamless Interactive Television
Programming And Expandable User Participation
10. Multiple Access Television
11. Simulcast of Interactive Signals With A Conventional Video Signal
12. Interactive System and Method for Offering Expert Based Interactive
Program
13. Compressed Digital Data Interactive Program System
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