Exhibit 10.25
NextLevel Systems, Inc.
Broadband Networks Group
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Tel 000-000-0000 /000-000-0000
xxx.xxxx.xxx
November 14,1997
Worldgate Communications, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Gentlemen:
This letter outlines our current understanding regarding the terms and
conditions under which NextLevel Systems, Inc. ("NLS") and Worldgate
Communications, Inc. ("Worldgate") will develop, manufacture, market and sell
the hardware and software necessary to enable Worldgate's television-based
internet access application (the "Worldgate Application") to operate on NLS's
CFT2200 advanced analog settops.
A. NLS agrees that the initial deployment and marketing of the Worldgate
Application in North America will be substantially and exclusively (unless
otherwise agreed between the parties) on the following terms and conditions:
1. Worldgate will design and develop a hardware and embedded
software add-on module ("Worldgate Add-On Module") to be
integrated with NLS's existing Feature Expansion Modules
("FEM") contained within NLS's current CFT2200 settop
terminal, according to the terms and conditions contained in
the Certification Agreement attached hereto as Exhibit A (the
"Certification Agreement").
2. Prior to any marketing or selling of the Worldgate Add-On
Module and the Worldgate Application as certified by NLS, the
Worldgate Add-On Module and Worldgate Application must be
certified in accordance with the requirements of the
Certification Agreement. Prior to such certification,
Worldgate shall market and sell the Worldgate Application and
the Worldgate Add-On Module only as "pending certification."
NextLevel will not provide any support relating to uncertified
Worldgate products.
3. After certification, Worldgate will market and sell the
Worldgate Add-On Module and the Worldgate Application
separately from NLS's CFT2200 settop terminal and will not
quote any prices to a customer concerning any NLS products,
including without limitation CFT2200 settop terminals equipped
with FEMs. All pricing for such NLS products shall be quoted
exclusively by NLS. All pricing for Worldgate products shall
be quoted exclusively by Worldgate and may include passing-on
of any FEM
exclusively by NLS. All pricing for Worldgate products shall
be quoted exclusively by Worldgate and may include passing-on
of any FEM reimbursement costs to the customer. Worldgate and
NLS will also enter into a joint marketing agreement on terms
and conditions acceptable to both parties in connection with
the marketing and sale of their respective products as
described in this Section A.
4. In connection with Worldgate's marketing and sale of the
Worldgate Module and the Worldgate Application, Worldgate will
be exclusively responsible for all overhead, costs and
expenses associated with (i) the anufacture of the Worldgate
Add-On Module (ii) the delivery of the Worldgate Add-On Module
to NLS's designated factory (iii) the download of all software
required to enable the Worldgate Application to operate on
NLS's FEM and CFn200 settop, including the cost of
incorporating any Worldgate software in NLS's mono-file
downloads for CFT'2200 settops and (iv) all headend and other
equipment and software specific to the Worldgate Application
and service.
5. Worldgate will pay NILS an assembly and logistics fee to be
mutually agreed upon between the parties, to cover the cost of
having NLS install each Worldgate Add-On Module in NLS's FEM
at NLS's factory or other NLS designated facility.
6. For NLS customers desiring NLS's digital audio and third party
application functionality, NLS will sell CFT2200 settops
equipped with the Worldgate Add-On Module at no incremental
increase in price over the standard prices charged for CFT2200
settop terminals equipped with FEMs containing such
functionality. For NLS customers electing not to purchase
digital audio or third party application functionality, NLS
will sell the customer CFT2200 settops with an FEM (with
functionality disabled) at no incremental increase in price
over the standard prices charged for base CFT2200 settop
terminals; however, for this implementation Worldgate will
reimburse NLS for the difference between the price of the
CFT2200 base settop and the price of the CFT2200 settop with a
fully functional FEM. NLS will sell CFT2200 settops equipped
with the Worldgate Add-On Module only to cable system which
have been authorized by Worldgate to purchase such equipment.
7. Worldgate will separately warrant the Worldgate Application
and the Worldgate Add-On Module to NLS customers and shall be
responsible for all warranty claims related to such equipment
and service. Worldgate shall indemnify NLS for all liability,
costs, damages and expenses associated with breach of any
warranty related to the Worldgate Add-On Module and the
Worldgate Application. In addition, Worldgate will indemnify
NLS against all liability, costs, damages and expenses
incurred by NLS which are caused by or associated with
failures of the Worldgate Add-On Module and/or the Worldgate
Application, including all liability,
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costs, damages and expenses associated with late delivery
penalties and retrieval costs, as well as all penalties
associated with out-of-box failure, field failure and
system failure of CFT2200 settop terminals equipped with
the Worldgate Add-On Module. NLS will indemnify Worldgate
against all liability, costs, damages and expenses incurred
by Worldgate as a result of breach of warranty claims
relating to the Worldgate Application and/or the Worldgate
Add-On Module,-but only to the extent that such liability,
costs, damages and expenses are caused by NLS.
8. Worldgate will authorize NLS technicians to service, repair
and/or replace defective Worldgate Add-On Modules and will
provide all documentation and training of NLS technicians
necessary for such technicians to carry out such
responsibilities, all at Worldgate's sole cost and expense.
Such documentation and training shall include documentation
and training relating to network and system equipment and
software required in order for the Worldgate Application to
operate on cable systems.
9. Worldgate will indemnify NLS and its customers from any and
all intellectual property infringement claims related to the
design, development, marketing, sale and use of the Worldgate
Application and the Worldgate Add-On Module, to the extent
that Worldgate is partially or wholly responsible for such
infringement claims. Worldgate agrees for itself and for its
successors and assigns (the "Releasing Party"), that the
Releasing Party shall not assert at any time against NLS, its
successors and assigns (the "Released Party"), nor permit or
allow any other person, firm or entity to assert against the
Released Party any patent in which the Releasing Party now or
in the future owns any right, title or interest, or otherwise
controls, for any infringement of such patent or patent
interest as a result of the past, present or future design,
development, manufacture, marketing, sale and/or use of third
party products which are integrated in and\or certified to run
on any NLS products and which offer, in whole or in part, the
same or similar functionality as the Worldgate Application and
the Worldgate Add-On Module. This clause shall not be
interpreted to mean that Worldgate shall be limited in seeking
any remedy it might have against any third party or to limit
Worldgate's right to enforce an injunction or other judgment
against such third party. This clause also does not apply to
any allegation by Worldgate of direct patent infringement
solely undertaken by NLS through its employees or contractors.
10. NLS shall not be responsible or liable to Worldgate for any
delay or failure to integrate or certify the Worldgate
Application or the Worldgate Add-On Module to operate on any
NLS advanced analog settop terminal.
11. Worldgate will support the implementation of the Worldgate
Application described in Section A of this letter agreement
for so long as NLS's customers desire to continue purchasing
the Section A implementation. In
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addition, if the implementation described in Section B becomes
commercially available, Worldgate will continue to market,
sell and support the implementation described in Section A and
shall upgrade (to the extent required by the marketplace) the
Section A implementation to provide any additional
functionality provided in the Section B implementation.
Worldgate will be solely responsible for the cost of any
upgrade (but not retrofit) of the Section A implementation of
the Worldgate Application in order to comply with the
requirements of the preceding sentence.
B. ADDITIONAL WORLDGATE MODULES. The parties may mutually agree after
further discussion and evaluation, that Worldgate would design and develop the
internal modules described in Section B. I hereof for NLS's CFT2200 which would
replace the NLS FEM and which would also contain (i) the hardware and software
necessary for NLS's digital audio functionality, including the Music Choice
Service, home theater and digital audio security, and (ii) support for all 3rd
party applications designated by NLS, including Wink enhance broadcasting,
CableSoft virtual channels and interactive electronic program guides
(hereinafter, "3rd Party Applications"), according to the timetables described
in Section B.1 (collectively, the "Additional Worldgate Modules"). Such
functionality shall be backward compatible with the implementation described in
Section A and shall have the same quality and functionality as currently
available on CFT2200 settops equipped with FEMs. In such an event, the design,
development, marketing, manufacture and sale of the Additional Worldgate Modules
in North America would be accomplished substantially and exclusively (unless
otherwise agreed between the parties) on the following terms and conditions:
1. Worldgate will be responsible for designing and developing the
Additional Worldgate Modules according to NLS's
specifications, to be certified (as described in Section BA
hereof) and available for sale to NLS's customers by the dates
indicated:
a. Worldgate Only module 4/15/98
b. Worldgate with Digital Audio 7/15/98
c. Worldgate/3rd Party Applications 10/15/98
The above dates are based on NLS providing the level of
support described in Section B.3 hereof.
2. If necessary, NLS would license any necessary intellectual
property to Worldgate (to the extent NLS has the right to do
so) in order to permit Worldgate to incorporate the Music
Choice Service and other NLS proprietary digital audio
functionality on the Additional Worldgate Modules. Such
license would be limited exclusively for the purpose of
designing, developing, marketing and selling the Additional
Worldgate Modules exclusively for use in NLS's CFT2200
settops, with no right to sublicense or to use such
intellectual property for any other purpose. All intellectual
property resulting from the design, development and
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integration of NLS's digital audio functionality with the
Additional Worldgate Modules, including any modifications or
improvements thereof (whether created jointly, or by either
Worldgate or NLS separately) would be owned exclusively by
NLS.
3. To facilitate the design of the Additional Worldgate Modules,
NLS will make available to Worldgat6, free of charge, the
following technical support on a dedicated basis,one regularly
scheduled day per week, for a period of 3 months from the date
of this letter:
- One (1) hardware engineer
- One (1) firmware engineer
Additional NLS resources can be made available, if necessary,
on a time & material basis, with a minimum per-day fee of
$2,000. All technical support will either be telephonic or
will be provided at NLS's designated facility.
4. Prior to marketing and distribution of any of the Additional
Worldgate Modules and the Worldgate Application as
"certified", (i) such hardware and software must be certified
to operate on NLS's CFT2200 settop in a manner similar to the
certification process outlined in the Certification Agreement
attached as Exhibit A hereto, subject to the payment of fees
by Worldgate to NLS as mutually agreed upon between the
parties, (ii) prior to such certification, any such hardware
and software will be marketed only as "pending certification",
and (iii) Worldgate and NLS will only advise customers that
Worldgate and NLS are working together to provide the
Worldgate Application with an NLS CFT2200 base settop (without
the functionality currently available through the FEM), which
Worldgate anticipates will provide the features and
functionality currently available on CFT2200 settops equipped
with FEMs, by providing such features and functionality
through the Additional Worldgate Module and the Worldgate
Application. Except for the intellectual property rights
described in Section B.2 (which will be governed by the terms
of a separate license agreement consistent with the terms of
Section B.2), all intellectual property rights arising out of
the design and development of the Additional Worldgate Modules
will be handled in a manner consistent with the Certification
Agreement. NextLevel will not provide any support for
uncertified Worldgate products.
5. After certification, the applicable Additional Worldgate
Modules and the Worldgate Application would be manufactured,
marketed and sold substantially as described in item nos. A.2
through A.9, above as if the applicable Worldgate Modules were
the "Worldgate Add-On Module" described in Section A, except
that in connection with marketing and selling the Additional
Worldgate Modules with NLS's CFT2200 settops (i) NLS will
market and sell to its customers a base CFT2200 (without
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FEM) at no incremental increase in price over the price of
NLS's base CFT-2200 (without FEM), (ii) Worldgate will
separately market and sell the applicable Additional Worldgate
Modules to NLS customers and (iii) if NLS's CFT2200 settop is
delivered to a customer without an FEM, Worldgate shall not be
required to reimburse NLS for the cost of the FEM.
6. NLS shall not be responsible or liable to Worldgate for any
delay or failure to integrate or certify the Worldgate
Application or any of the Additional Worldgate Modules to
operate on any NLS advanced analog settop terminal.
C. The parties may enter into Definitive Agreements, as may be necessary,
consistent with the terms and conditions described above.
D. Each party agrees not to disclose the terms of this letter or the activities
described herein to any third party without the other's written consent.
X. Xxxxxx party may, in its sole discretion, terminate its obligations under
this letter at any time without and further liability to the other party, in the
event that such party decides that the integration of the Worldgate Application
with NextLevel's CFT2200 is not economically feasible or is not in such party's
best interest. Notwithstanding the foregoing, the obligations contained in
sections A.2 and BA shall continue after any termination.
F. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, IN NO EVENT SHALL EITHER
NEXTLEVEL OR WORLDGATE BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN ANY WAY OUT OF THIS LETTER, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY. THIS LIMITATION SHALL APPLY EVEN IF SUCH
PARTY KNOWS OR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED
FOR HEREIN. NOTWITHSTANDING THE FOREGOING, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR ANY LOSS OF PROFITS OR LOSS OF DATA OCCURRING AS A RESULT OF THE
ACTIVITIES DESCRIBED HEREIN.
G. The relationship of the parties established by this letter is that of
independent contractors, and nothing contained in this letter shall be construed
to (i) give either party the power to direct and control the day-to-day
activities of the other, (ii) constitute the parties as partners, joint
venturers, co-owners or otherwise as participants in a joint or common
undertaking, or (iii) allow either party to create or assume any obligation on
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behalf of the other party for any purpose whatsoever. This letter does not
create any exclusivity.
If you are in agreement with the foregoing, please execute a copy of this letter
and return it to the undersigned at your earliest convenience.
NEXTLEVEL SYSTEMS, INC.,
Broadband Networks Group
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------
Title: VP/GM ANS
-----------------------
Agreed:
WORLDGATE COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
---------------------------
Title: VP/GM
--------------------------
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